10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 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

Securities registered pursuant to Section 12(b) of the Act

NONE

Securities registered pursuant to Section 12(g) of the Act:

COMMON STOCK, PAR VALUE $1.25 PER SHARE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    ☐  Yes    ☒  No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    ☐  Yes    ☒  No

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 Act).    ☐  Yes    ☒  No

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. $33,633,344.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date: 7,095,920 shares of common stock outstanding as of March 2, 2020.

Documents Incorporated by Reference.

Portions of the Registrant’s 2019 Annual Report to Shareholders are incorporated by reference into Part II of this report. Portions of the Registrant’s definitive Proxy Statement for the 2020 Annual Meeting of Shareholders are incorporated by reference into Part III of this report.

FORM 10-K CROSS REFERENCE INDEX

As indicated below, portions of (i) the Registrant’s Annual Report to Shareholders for the fiscal year ended December 31, 2019 and (ii) the Registrant’s definitive Proxy Statement for the 2020 Annual Meeting of Shareholders, as filed with the Securities and Exchange Commission via EDGAR, are incorporated by reference into Parts II and III of this report.

Key
AR	Annual Report to Shareholders for the fiscal year ended December 31, 2019
Proxy	Definitive Proxy Statement for the 2020 Annual Meeting of Shareholders
10-K	This annual report on Form 10-K for the fiscal year ended December 31, 2019
		Document
Part I
Item 1.	Business	10-K
Item 1A.	Risk Factors	10-K
Item 1B.	Unresolved Staff Comments	10-K
Item 2.	Properties	10-K
Item 3.	Legal Proceedings	10-K
Item 4.	Mine Safety Disclosures	10-K
Part II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	10-K
Item 6.	Selected Financial Data	AR
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	AR
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	10-K
Item 8.	Financial Statements and Supplementary Data	AR
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	10-K
Item 9A.	Controls and Procedures	10-K
Item 9B.	Other Information	10-K
Part III
Item 10.	Directors, Executive Officers and Corporate Governance	Proxy
Item 11.	Executive Compensation	Proxy
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	Proxy
Item 13.	Certain Relationships and Related Transactions, and Director Independence	Proxy
Item 14.	Principal Accounting Fees and Services	Proxy
Part IV
Item 15.	Exhibits, Financial Statement Schedules	10-K

PART I

Item 1. Business.

Uwharrie Capital Corp (the “Company”) is a North Carolina business corporation and registered bank holding company. The Company was incorporated on February 24, 1993 to become the bank holding company for Uwharrie Bank (the “Bank”), a North Carolina commercial bank, originally chartered on September 28, 1983 as Bank of Stanly, and its three wholly-owned subsidiaries, The Strategic Alliance Corporation (“Strategic Alliance”), BOS Agency, Inc. (“BOS Agency”) and Gateway Mortgage, Inc., a mortgage brokerage company acquired in August 2000. The Company also owns two non-bank subsidiaries, Uwharrie Investment Advisors, Inc., formerly known as Strategic Investment Advisors, Inc., formed in 1999 and Uwharrie Mortgage, Inc. formed in 2004.

On January 19, 2000, the Company completed its acquisition of Anson Bancorp, Inc. and its subsidiary, Anson Savings Bank. The savings bank retained its North Carolina savings bank charter and became a wholly-owned subsidiary of the Company until September 1, 2013 when it was merged with and into the Bank.

During 2002, the Company expanded its service area into the Cabarrus County market. On April 10, 2003 the Company capitalized a new wholly-owned subsidiary bank, Cabarrus Bank & Trust Company. As of that date, Cabarrus Bank & Trust Company purchased two Cabarrus County branch offices of the Bank, formerly known as Bank of Stanly, in order to commence operations. Cabarrus Bank & Trust Company was merged with and into the Bank, effective September 1, 2013.

The Company and its subsidiaries conduct their operations in Stanly County, Anson County, Cabarrus County and Mecklenburg County, North Carolina. The Company is community-oriented, emphasizing the well-being of the people in its region above financial gain in directing its corporate decisions. In order to best serve its communities, the Company believes it must remain a strong, viable, independent financial institution. This means that the Company must evolve with today’s quickly changing financial services industry. Beginning with its inception in 1993, the Company implemented its current strategy to remain a strong, independent community financial institution that is competitive with larger institutions and allows its service area to enjoy the benefits of a local financial institution and the strength its capital investment provides the community. This strategy consists of developing and expanding the Company’s technological capabilities while recruiting and maintaining a workforce sensitive to the financial services needs of its customers. This strategy has provided the Company with the capacity to grow and leverage the cost of delivering competitive services.

At December 31, 2019, the Company and related subsidiaries had 176 full-time and 15 part-time employees.

Business of the Bank

The Bank is a North Carolina chartered commercial bank, which was incorporated in 1983 and which commenced banking operations as Bank of Stanly on January 26, 1984. Its main banking office is located at 167 North Second Street, Albemarle, North Carolina, and it operates nine other banking offices and two loan production offices in Stanly County, Cabarrus County, Anson County and Mecklenburg County, North Carolina. The Bank is the only commercial bank headquartered in Stanly County.

Its operations are primarily retail oriented and directed to individuals and small to medium-sized businesses located in its market area, and its deposits and loans are derived primarily from customers in its geographical market. The Bank provides traditional commercial and consumer banking services, including personal and commercial checking and savings accounts, money market accounts, certificates of deposit, individual retirement accounts, and related business and individual banking services. The Bank’s lending activities include commercial loans and various consumer-type loans to individuals, including installment loans, mortgage loans, equity lines of credit and overdraft checking credit. The Bank also offers Internet Banking, mobile banking, 24-Hour Telephone Banking, and issues Visa ® Check Cards, an electronic banking card, which functions as a point-of-sale card and allows its customers to access their deposit accounts at the Bank’s ten branches and at most automated teller machines of other banks linked to the STAR ® or CIRRUS ® networks. The Bank offers credit cards under license from MasterCard ®. The Bank does not presently provide the services of a trust department.

Non-Bank Subsidiaries

The Bank has three wholly-owned subsidiaries, BOS Agency, Strategic Alliance and Gateway Mortgage, Inc. BOS Agency was formed during 1987 and engages in the sale of various insurance products, including annuities, life insurance, long-term care, disability insurance and Medicare supplements. Strategic Alliance was formed during 1989 as BOS Financial Corporation and, during 1993, adopted its current name. It is registered with the SEC and licensed by the Financial Industry Regulatory Authority (“FINRA”) as a securities broker-dealer. Gateway Mortgage, Inc. is a mortgage brokerage company, acquired by the Bank in 2000.

The Company has two non-bank subsidiaries. Uwharrie Investment Advisors, Inc., which is registered as an investment advisor with the SEC, began operations on April 1, 1999 and provides portfolio management services to customers in the Charlotte

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Metropolitan and Uwharrie Lakes Regions. The Company established Uwharrie Mortgage, Inc., a subsidiary to serve in the capacity of trustee and substitute trustee under deeds of trust, in 2004.

Competition

Commercial banking in North Carolina is extremely competitive, due in large part to early adoption of statewide and interstate branching laws. The Company encounters significant competition from a number of sources, including other bank holding companies, commercial banks, credit unions, and other financial institutions and financial intermediaries including financial technology companies.

Among commercial banks, the Bank competes in its market areas with some of the largest banking organizations operating in the state, several of which have hundreds of branches in North Carolina and billions of dollars in assets. Consequently, some competitors have substantially higher lending limits due to their greater total capitalization, and may perform functions for their customers that the Company currently does not offer. The Company could encounter increased competition in the future, from existing or new competitors that may limit its ability to maintain or increase its market share or otherwise materially and adversely affect its business, results of operations and financial condition.

The Bank depends on its reputation as a community bank in its local market, direct customer contact, its ability to make credit and other business decisions locally, and personalized service to counter these competitive disadvantages.

Exposure to Local Economic Conditions

The Company’s success is dependent to a significant extent upon economic conditions in Stanly, Anson, Cabarrus and Mecklenburg Counties, and more generally, in the Charlotte Metropolitan and Uwharrie Lakes Regions. In addition, the banking industry in general is affected by economic conditions such as inflation, recession, unemployment and other factors beyond the Company’s control. Economic recession over a prolonged period or other economic dislocation in the Charlotte Metropolitan and Uwharrie Lakes Regions could cause increases in non-performing assets and impair the values of real estate collateral, thereby causing operating losses, diminishing liquidity and eroding capital. Although management believes its loan policy and review process results in sound and consistent credit decisions on its loans, there can be no assurance that future adverse changes in the economy in the Company’s market area would not have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

Impact of Technological Advances; Upgrade to Company’s Infrastructure

The banking industry is undergoing, and management believes it will continue to undergo, technological changes with frequent introductions of new technology-driven products and services. In addition to improving customer services, the effective use of technology increases efficiency and enables financial institutions to reduce costs. The Company’s future success will depend, in part, on its ability to address the needs of its customers by using technology to provide products and services that will satisfy customer demands for convenience as well as enhance efficiencies in the Company’s operations. Management believes that keeping pace with technological advances is critical for the Company in light of its strategy to continue its sustained pace of growth. As a result, the Company intends to continue to upgrade its internal systems, both through the efficient use of technology and by strengthening its policies and procedures. The Company also currently anticipates that it will evaluate opportunities to expand its array of technology-based products to its customers from time to time in the future.

Federal Bank Holding Company Regulation and Structure

As a registered bank holding company, the Company is subject to regulation under the Bank Holding Company Act of 1956 (the “BHCA”) and to the supervision, examination and reporting requirements of the Federal Reserve System. The Bank has a North Carolina commercial bank charter and is subject to regulation, supervision and examination by the Federal Reserve and the North Carolina Commissioner of Banks (“NCCOB”).

The BHCA requires every bank holding company to obtain the prior approval of the Federal Reserve before:

• it may acquire direct or indirect ownership or control of any voting shares of any bank if, after the acquisition, the bank holding company will directly or indirectly own or control more than 5% of the voting shares of the bank;

• it or any of its subsidiaries, other than a bank, may acquire all or substantially all of the assets of any bank; or

• it may merge or consolidate with any other bank holding company.

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The BHCA further provides that the Federal Reserve may not approve any transaction that would result in a monopoly or that would substantially lessen competition in the banking business, unless the public interest in meeting the needs of the communities to be served outweighs the anti-competitive effects. The Federal Reserve is also required to consider the financial and managerial resources and future prospects of the bank holding companies and banks involved and the convenience and needs of the communities to be served. Consideration of financial resources generally focuses on capital adequacy, and consideration of convenience and needs issues focuses, in part, on the performance under the Community Reinvestment Act of 1977, both of which are discussed elsewhere in more detail.

Subject to various exceptions, the BHCA and the Change in Bank Control Act, together with related regulations, require Federal Reserve approval prior to any person or company acquiring “control” of a bank holding company. Control is conclusively presumed to exist if a person or company acquires 25% or more of any class of voting securities of a bank holding company. Control is also presumed to exist, although rebuttable, if a person or company acquires 10% or more, but less than 25%, of any class of voting securities and either:

• the bank holding company has securities registered under Section 12 of the Securities Exchange Act of 1934, as amended, or the Exchange Act; or

• no other person owns a greater percentage of that class of voting securities immediately after the transaction.

The Company’s common stock is registered under Section 12 of the Exchange Act. Federal reserve regulations provide a procedure for challenging rebuttable presumptions of control.

The BHCA generally prohibits a bank holding company from engaging in activities other than banking, managing or controlling banks or other permissible subsidiaries, and acquiring or retaining direct or indirect control of any company engaged in any activities other than activities closely related to banking or managing or controlling banks. In determining whether a particular activity is permissible, the Federal Reserve considers whether performing the activity can be expected to produce benefits to the public that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interest or unsound banking practices. The Federal Reserve has the power to order a bank holding company or its subsidiaries to terminate any activity or control of any subsidiary when the continuation of the activity or control constitutes a serious risk to the financial safety, soundness or stability of any bank subsidiary of that bank holding company.

Under the BHCA, a bank holding company may file an election with the Federal Reserve to be treated as a financial holding company and engage in an expanded list of financial activities. The election must be accompanied by a certification that all of the company’s insured depository institution subsidiaries are “well capitalized” and “well managed.” Additionally, the Community Reinvestment Act of 1977 rating of each subsidiary bank must be satisfactory or better. If, after becoming a financial holding company and undertaking activities not permissible for a bank holding company, the company fails to continue to meet any of the prerequisites for financial holding company status, the company must enter into an agreement with the Federal Reserve to comply with all applicable capital and management requirements. If the company does not return to compliance within 180 days, the Federal Reserve may order the company to divest its subsidiary banks or the company may discontinue or divest investments in companies engaged in activities permissible only for a bank holding company that has elected to be treated as a financial holding company. The Company has not filed an election to become a financial holding company.

Under Federal Reserve policy and as has been codified by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, the Company is expected to act as a source of financial strength for the Bank and to commit resources to support the Bank. This support may be required at times when the Company might not be inclined to provide it. In addition, any capital loans made by the Company to the Bank will be repaid only after the Bank’s deposits and various other obligations are repaid in full.

The Bank is also subject to numerous state and federal statutes and regulations that affect its business, activities and operations and is supervised and examined by state and federal bank regulatory agencies. The Federal Reserve and the NCCOB regularly examine the operations of the Bank and are given the authority to approve or disapprove mergers, consolidations, the establishment of branches and similar corporate actions. These agencies also have the power to prevent the continuance or development of unsafe or unsound banking practices or other violations of law.

Bank Merger Act

Section 18(c) of the Federal Deposit Insurance Act, popularly known as the “Bank Merger Act,” requires the prior written approval of the federal banking regulators before any bank may (i) merge or consolidate with, (ii) purchase or otherwise acquire the assets of, or (iii) assume the deposit liabilities of, another bank if the resulting institution is to be a state nonmember bank.

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The Bank Merger Act prohibits approval of any proposed merger transaction that would result in a monopoly, or would further a combination or conspiracy to monopolize or to attempt to monopolize the business of banking in any part of the United States. Similarly, the Bank Merger Act prohibits the approval of a proposed merger transaction whose effect in any section of the country may be substantially to lessen competition, or to tend to create a monopoly, or which in any other manner would be in restraint of trade. An exception may be made in the case of a merger transaction whose effect would be to substantially lessen competition, tend to create a monopoly, or otherwise restrain trade, if federal regulators find that the anticompetitive effects of the proposed transaction are clearly outweighed in the public interest by the probable effect of the transaction in meeting the convenience and needs of the community to be served.

In every proposed merger transaction, federal banking regulators must also consider the financial and managerial resources and future prospects of the existing and proposed institutions, the convenience and needs of the community to be served, and the effectiveness of each insured depository institution involved in the proposed merger transaction in combating money-laundering activities, including in overseas branches.

State Law

The Bank is subject to extensive supervision and regulation by the NCCOB. The NCCOB oversees state laws that set specific requirements for bank capital and that regulate deposits in, and loans and investments by, banks, including the amounts, types, and in some cases, rates. The NCCOB supervises and performs periodic examinations of North Carolina-chartered banks to assure compliance with state banking statutes and regulations, and banks are required to make regular reports to the NCCOB describing in detail their resources, assets, liabilities, and financial condition. Among other things, the NCCOB regulates mergers and consolidations of North Carolina state-chartered banks, capital requirements for banks, the payment of dividends, loans to officers and directors, record keeping, types and amounts of loans and investments, and the establishment of branches.

The NCCOB has extensive enforcement authority over North Carolina banks. Such authority includes the ability to issue cease-and-desist orders and to seek civil money penalties. The NCCOB may also take possession of a North Carolina bank in various circumstances, including for a violation of its charter or of applicable laws, operating in an unsafe and unsound manner, or as a result of an impairment of its capital, and may appoint a receiver.

The Company is also required to maintain registration as a bank holding company with the NCCOB. Subject to certain exceptions, the Company may not acquire control over another bank or bank holding company or consummate a merger or other combination transaction with another company without the prior approval of the NCCOB. The NCCOB also has authority to assert civil money penalties against a holding company if the NCCOB determines such holding company to be in violation of any banking laws and the holding company fails to comply with an NCCOB order to cease and desist from such violations of law.

The primary state banking laws to which the Bank is subject are set forth in Chapters 53C and 53 of the North Carolina General Statutes.  Certain provisions of the North Carolina Business Corporation Act are also applicable to the Bank, as a North Carolina banking corporation.

Payment of Dividends and Other Restrictions

The Company is a legal entity separate and distinct from the bank it owns. While there are various legal and regulatory limitations under federal and state law on the extent to which banks can pay dividends or otherwise supply funds to holding companies, the principal source of cash revenues for the Company is dividends from the Bank. The relevant federal and state regulatory agencies have authority to prohibit a state bank or bank holding company, which would include Uwharrie Capital Corp and the Bank, from engaging in what, in the opinion of such regulatory body, constitutes an unsafe or unsound practice in conducting its business. The payment of dividends could, depending upon the financial condition of a bank, be deemed to constitute an unsafe or unsound practice in conducting its business.

North Carolina commercial banks, such as the Bank, are subject to legal limitations on the amounts of dividends they are permitted to pay. Specifically, an insured depository institution, such as the Bank, is prohibited from making capital distributions, including the payment of dividends, if, after making such distribution, the institution would become “undercapitalized” (as such term is defined in the applicable law and regulations).

The Federal Reserve has issued a policy statement on the payment of cash dividends by bank holding companies, which expresses the Federal Reserve’s view that a bank holding company should pay cash dividends only to the extent that the holding company’s net income for the past year is sufficient to cover both the cash dividends and a rate of earning retention that is consistent with the holding company’s capital needs, asset quality and overall financial condition. The Federal Reserve also indicated that it would be inappropriate for a holding company experiencing serious financial problems to borrow funds to pay dividends.

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Furthermore, under the prompt corrective action regulations adopted by the Federal Reserve, the Federal Reserve may prohibit a bank holding company from paying any dividends if any of the holding company’s bank subsidiaries are classified as undercapitalized.

A bank holding company is required to give the Federal Reserve prior written notice of any purchase or redemption of its outstanding equity securities if the gross consideration for the purchase or redemption, when combined with the net consideration paid for all such purchases or redemptions during the preceding 12 months, is equal to 10% or more of its consolidated net worth. The Federal Reserve may disapprove such a purchase or redemption if it determines that the proposal would constitute an unsafe or unsound practice or would violate any law, regulation, Federal Reserve order or any condition imposed by, or written agreement with, the Federal Reserve.

Capital Adequacy

The Bank must comply with the Federal Reserve’s established capital adequacy standards. The Federal Reserve has promulgated two basic measures of capital adequacy: a risk-based measure and a leverage measure. Banks and bank holding companies must satisfy all applicable capital standards to be considered in compliance. Pursuant to the Federal Reserve’s Small Bank Holding Company Policy Statement, the Company is exempt from the Federal Reserve’s risk-based capital and leverage rules.

The risk-based capital standards are designed to make regulatory capital requirements sensitive to differences in risk profile among banks and bank holding companies, account for off-balance-sheet exposure and minimize disincentives for holding liquid assets.

Assets and off-balance-sheet items are assigned to broad risk categories, each with appropriate weights. The resulting capital ratios represent capital as a percentage of total risk-weighted assets and off-balance-sheet items. The minimum guideline for the ratio of total capital to risk-weighted assets is 8%. At least half of total capital must be Tier 1 Capital, which is common stock, undivided profits, minority interests in the equity accounts of consolidated subsidiaries and noncumulative perpetual preferred stock, less goodwill and certain other intangible assets. The remainder may consist of Tier 2 Capital, which is subordinated debt, other preferred stock and a limited amount of loan loss reserves.

At December 31, 2019 the Bank’s total risk-based capital ratio and its Tier 1 risk-based capital ratio were 13.63% and 13.16%, respectively. The Bank has not been advised by any federal banking agency of any additional specific minimum capital ratio requirement applicable to it.

In addition, the Federal Reserve has established minimum leverage ratio guidelines for bank holding companies. These guidelines provide for a minimum ratio of Tier 1 Capital to average assets, less goodwill and certain other intangible assets, of 3% for bank holding companies that meet specified criteria. All other bank holding companies generally are required to maintain a minimum leverage ratio of 4%. The Company’s ratio at December 31, 2019 was 7.37%, compared to 7.40% at December 31, 2018. The guidelines also provide that bank holding companies experiencing internal growth or making acquisitions will be expected to maintain strong capital positions substantially above the minimum supervisory levels without significant reliance on intangible assets. Furthermore, the Federal Reserve has indicated that it will consider a “tangible Tier 1 Capital leverage ratio” and other indications of capital strength in evaluating proposals for expansion or new activities. The Federal Reserve has not advised us of any additional specific minimum leverage ratio or tangible Tier 1 Capital leverage ratio applicable to the Company.

Failure to meet capital guidelines could subject a bank to a variety of enforcement remedies, including issuance of a capital directive, the termination of deposit insurance by the FDIC, a prohibition on taking brokered deposits and certain other restrictions on its business. As described below, federal banking regulators can impose substantial additional restrictions upon FDIC-insured depository institutions that fail to meet applicable capital requirements.

The Federal Deposit Insurance Act, or FDI Act, requires the federal regulatory agencies to take “prompt corrective action” if a depository institution does not meet minimum capital requirements. The FDI Act establishes five capital tiers: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” and “critically undercapitalized.” A depository institution’s capital tier will depend upon how its capital levels compare to various relevant capital measures and certain other factors, as established by regulation.

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The federal bank regulatory agencies have adopted regulations establishing relevant capital measures and relevant capital levels applicable to FDIC-insured banks. The relevant capital measures are the Total Risk-Based Capital ratio, Tier 1 Risk-Based Capital ratio and the leverage ratio. Under the regulations, an FDIC-insured bank will be:

• “well capitalized” if it has a Total Risk-Based Capital ratio of 10% or greater, a Tier 1 Risk-Based Capital ratio of 8% or greater and a leverage ratio of 5% or greater and is not subject to any order or written directive by the appropriate regulatory authority to meet and maintain a specific capital level for any capital measure;

• “adequately capitalized” if it has a Total Risk-Based Capital ratio of 8% or greater, a Tier 1 Risk-Based Capital ratio of 6% or greater and a leverage ratio of 4% or greater (3% in certain circumstances) and is not “well capitalized;”

• “undercapitalized” if it has a Total Risk-Based Capital ratio of less than 8%, a Tier 1 Risk-Based Capital ratio of less than 6% or a leverage ratio of less than 4% (3% in certain circumstances);

• “significantly undercapitalized” if it has a Total Risk-Based Capital ratio of less than 6%, a Tier 1 Risk-Based Capital ratio of less than 4% or a leverage ratio of less than 3%; and

• “critically undercapitalized” if its tangible equity is equal to or less than 2% of average quarterly tangible assets.

An institution may be downgraded to, or deemed to be in, a capital category that is lower than is indicated by its capital ratios if it is determined to be in an unsafe or unsound condition or if it receives an unsatisfactory examination rating with respect to certain matters. As of December 31, 2019, the Bank had capital levels that qualify as “well capitalized” under such regulations.

The FDI Act generally prohibits an FDIC-insured bank from making a capital distribution (including payment of a dividend) or paying any management fee to its holding company if the bank would thereafter be “undercapitalized.” “Undercapitalized” banks are subject to growth limitations and are required to submit a capital restoration plan. The federal regulators may not accept a capital plan without determining, among other things, that the plan is based on realistic assumptions and is likely to succeed in restoring the bank’s capital. In addition, for a capital restoration plan to be acceptable, the bank’s parent holding company must guarantee that the institution will comply with such capital restoration plan. The aggregate liability of the parent holding company is limited to the lesser of: (i) an amount equal to 5% of the bank’s total assets at the time it became “undercapitalized”; and (ii) the amount which is necessary (or would have been necessary) to bring the institution into compliance with all capital standards applicable with respect to such institution as of the time it fails to comply with the plan. If a bank fails to submit an acceptable plan, it is treated as if it is “significantly undercapitalized.”

“Significantly undercapitalized” insured banks may be subject to a number of requirements and restrictions, including orders to sell sufficient voting stock to become “adequately capitalized,” requirements to reduce total assets, cease receipt of deposits from correspondent banks, or dismiss directors or officers, and restrictions on interest rates paid on deposits, compensation of executive officers, and capital distributions by the parent holding company. “Critically undercapitalized” institutions are subject to the appointment of a receiver or conservator, may not make any payment of principal or interest on certain subordinated debt, extend credit for a highly leveraged transaction, or enter into any material transaction outside the ordinary course of business. A bank that is not “well capitalized” is also subject to certain limitations relating to brokered deposits.

The regulatory capital framework under which the Company and the Bank operate has changed in significant respects as a result of the Dodd-Frank Act, which was enacted in July 2010, and other regulations, including the separate regulatory capital requirements put forth by the Basel Committee on Banking Supervision, commonly known “Basel III.”

On July 2, 2013, the Federal Reserve approved a final rule that establishes an integrated regulatory capital framework that addresses shortcomings in certain capital requirements. The FDIC adopted a substantially similar interim final rule on July 9, 2013. The capital rule implemented in the United States the Basel III regulatory capital reforms from the Basel Committee on Banking Supervision and certain changes required by the Dodd-Frank Act. This rule began to apply to us and the Bank effective January 1, 2015.

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The major provisions of the rule applicable to us are:

• The rule implemented higher minimum capital requirements, including a new common equity Tier 1 capital requirement, and established criteria that instruments must meet in order to be considered Common Equity Tier 1 capital, additional Tier 1 capital, or Tier 2 capital. The minimum capital to risk-weighted assets (“RWA”) requirements under the rule are a common equity Tier 1 capital ratio of 4.5% and a Tier 1 capital ratio of 6.0%, which is an increase from 4.0%, and a total capital ratio that remains at 8.0%. The minimum leverage ratio (Tier 1 capital to total assets) is 4.0%. The rule maintains the general structure of the current prompt corrective action, or PCA, framework while incorporating these increased minimum requirements.

• The rule implemented changes to the definition of capital, including stricter eligibility criteria for regulatory capital instruments that disallows the inclusion of instruments such as trust preferred securities in Tier 1 capital going forward (subject to certain exceptions), and new constraints on the inclusion of minority interests, mortgage-servicing assets (“MSAs”), deferred tax assets (“DTAs”), and certain investments in the capital of unconsolidated financial institutions.

• Under the rule, in order to avoid limitations on capital distributions, including dividend payments and certain discretionary bonus payments to executive officers, a banking organization must hold a capital conservation buffer composed of common equity Tier 1 capital above its minimum risk-based capital requirements. This buffer is intended to help ensure that banking organizations conserve capital when it is most needed, allowing them to better weather periods of economic stress. The buffer is measured relative to RWA. A banking organization with a buffer greater than 2.5% would not be subject to limits on capital distributions or discretionary bonus payments; however, a banking organization with a buffer of less than 2.5% would be subject to increasingly stringent limitations as the buffer approaches zero. The rule also prohibits a banking organization from making distributions or discretionary bonus payments during any quarter if its eligible retained income is negative in that quarter and its capital conservation buffer ratio was less than 2.5% at the beginning of the quarter. The minimum capital requirements plus the capital conservation buffer exceed the PCA well-capitalized thresholds.

• The rule also increased the risk weights for past-due loans, certain commercial real estate loans, and some equity exposures, and made selected other changes in risk weights and credit conversion factors.

The Bank was required to comply with the new rule beginning on January 1, 2015. Compliance by the Company and the Bank with these capital requirements affects their respective operations by increasing the amount of capital required to conduct operations.

In July 2019, the federal banking agencies released a final rule amending the U.S. Basel III capital rules to simplify the capital treatment of capital deductions and recognition of minority interests for banking organizations such as the Registrant that are not subject to the advanced approaches capital rule. The final rule:

• simplifies the framework of regulatory capital deductions and heightened risk weights for mortgage servicing assets, deferred tax assets arising from temporary differences that an institution could not realize through net operating loss carrybacks, and investments in the capital of unconsolidated financial institutions, resulting in potentially fewer deductions for these items;

• simplifies the recognition and calculation of minority interests that are includable in regulatory capital, resulting in potentially greater recognition of minority interests; and

• makes certain technical amendments to the capital rules.

Community Bank Leverage Ratio.  As discussed below, in May 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act (“EGRRCPA”) became law, which directs the federal banking agencies (which includes the FDIC, Federal Reserve Board, and Office of the Comptroller of the Currency, or OCC) to develop a community bank leverage ratio (“CBLR”) of not less than 8 percent and not more than 10 percent for qualifying community banking organizations.  EGRRCPA defines a qualifying community banking organization as a depository institution or depository institution holding company with total consolidated assets of less than $10 billion, which would include the Company and its banking subsidiary. A qualifying community banking organization that exceeds the CBLR level established by the agencies is considered to have met: (i) the generally applicable leverage and risk-based capital requirements under the agencies’ capital rule; (ii) the capital ratio requirements in order to be considered well capitalized under the agencies’ PCA framework (in the case of insured depository institutions); and (iii) any other applicable capital or leverage requirements. Section 201 of EGRRCPA defines the CBLR as the ratio of a banking organization’s CBLR tangible equity to its average total consolidated assets, both as reported on the banking organization’s applicable regulatory filing.

On September 17, 2019, the federal bank regulatory agencies passed a final rule on the CBLR, setting the minimum required CBLR at 9%. The rule went into effect on January 1, 2020.  Under the final rule, a qualifying community banking organization may elect to use the CBLR framework if its CBLR is greater than 9 percent.  A qualifying community banking organization that has chosen the proposed framework is not required to calculate the existing risk-based and leverage capital requirements. A bank is also

9

considered to have met the capital ratio requirements to be well capitalized for the agencies' prompt corrective action rules provided it has a CBLR greater than 9 percent.

Acquisitions

The Company must comply with numerous laws related to any potential acquisition activity. Under the BHCA, a bank holding company may not directly or indirectly acquire ownership or control of more than 5% of the voting shares or substantially all of the assets of any bank or merge or consolidate with another bank holding company without the prior approval of the Federal Reserve. The acquisition of non-banking companies is also regulated by the Federal Reserve. Current federal law authorizes interstate acquisitions of banks and bank holding companies without geographic limitation. Furthermore, a bank headquartered in one state is authorized to merge with a bank headquartered in another state, as long as neither of the states has opted out of such interstate merger authority prior to such date, and subject to any state requirement that the target bank shall have been in existence and operating for a minimum period of time, not to exceed five years, and to certain deposit market-share limitations. After a bank has established branches in a state through an interstate merger transaction, the bank may establish and acquire additional branches at any location in the state where a bank headquartered in that state could have established or acquired branches under applicable federal or state law. Additionally, since passage of the Dodd-Frank Act, banks are permitted to open a de novo branch in any state if that state would permit a bank organized in that state to open a branch.

Restrictions on Affiliate Transactions

Sections 23A and 23B of the Federal Reserve Act establish parameters for a bank to conduct “covered transactions” with its affiliates, with the objective of limiting risk to the insured bank. Generally, Sections 23A and 23B (i) limit the extent to which the bank or its subsidiaries may engage in “covered transactions” with any one affiliate to an amount equal to 10% of such bank’s capital stock and surplus, and limit the aggregate of all such transactions with all affiliates to an amount equal to 20% of such capital stock and surplus and (ii) require that all such transactions be on terms substantially the same, or at least as favorable, to the bank or subsidiary as those that would be provided to a non-affiliate. The term “covered transaction” includes the making of loans to the affiliate, purchase of assets from the affiliate, issuance of a guaranty on behalf of the affiliate and several other types of transactions.

The Dodd-Frank Act imposed additional restrictions on transactions between affiliates by amending these two sections of the Federal Reserve Act. Under the Dodd-Frank Act, restrictions on transactions with affiliates are enhanced by (i) including among “covered transactions” transactions between bank and affiliate-advised investment funds; (ii) including among “covered transactions” transactions between a bank and an affiliate with respect to securities repurchase agreements and derivatives transactions; (iii) adopting stricter collateral rules; and (iv) imposing tighter restrictions on transactions between banks and their financial subsidiaries.

FDIC Insurance Assessments

Assessments are paid by each Deposit Insurance Fund (DIF) member institution. The assessment rates for an insured depository institution vary according to the level of risk incurred in its activities, which for established small institutions like the Bank (i.e., those institutions with less than $10 billion in assets and insured for five years or more), is generally determined by reference to the institution’s supervisory ratings. The assessment rate schedule can change from time to time, at the discretion of the FDIC, subject to certain limits. The Bank’s insurance assessments during 2019 and 2018 were $230,000 and $234,000, respectively.

The FDIC may terminate insurance of deposits upon a finding that an institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC.

The Dodd-Frank Act expanded the base for FDIC insurance assessments, requiring that assessments be based on the average consolidated total assets less tangible equity capital of a financial institution. In 2011, the FDIC approved a final rule to implement the foregoing provision of the Dodd-Frank Act. Among other things, the final rule revised the assessment rate schedule to provide assessments ranging from 5 to 35 basis points, with the initial assessment rates subject to adjustments which could increase or decrease the total base assessment rates. The FDIC has three possible adjustments to an institution’s initial base assessment rate: (1) a decrease of up to five basis points (or 50% of the initial base assessment rate) for long-term unsecured debt, including senior unsecured debt and subordinated debt; (2) an increase for holding long-term unsecured or subordinated debt issued by other insured depository institutions known as the Depository Institution Debt Adjustment; and (3) for institutions not well rated and well capitalized, an increase not to exceed 10 basis points for brokered deposits in excess of 10 percent of domestic deposits.

The FDIC has authority to increase deposit insurance assessments.  A significant increase in insurance premiums would likely have an adverse effect on the operating expenses and results of operations of the Company and the Bank.  Management cannot predict what insurance assessment rates will be in the future.

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Community Reinvestment Act

The Community Reinvestment Act requires federal bank regulatory agencies to encourage financial institutions to meet the credit needs of low and moderate-income borrowers in their local communities. An institution’s size and business strategy determines the type of examination that it will receive. Large, retail-oriented institutions are examined using a performance-based lending, investment and service test. Small institutions are examined using a streamlined approach. All institutions may opt to be evaluated under a strategic plan formulated with community input and pre-approved by the bank regulatory agency.

The Community Reinvestment Act regulations provide for certain disclosure obligations. Each institution must post a notice advising the public of its right to comment to the institution and its regulator on the institution’s Community Reinvestment Act performance and to review the institution’s Community Reinvestment Act public file. Each lending institution must maintain for public inspection a file that includes a listing of branch locations and services, a summary of lending activity, a map of its communities and any written comments from the public on its performance in meeting community credit needs. The Community Reinvestment Act requires public disclosure of a financial institution’s written Community Reinvestment Act evaluations. This promotes enforcement of Community Reinvestment Act requirements by providing the public with the status of a particular institution’s community reinvestment record.

Community Reinvestment Act agreements with private parties must be disclosed and annual Community Reinvestment Act reports must be made available to a bank’s primary federal regulator. A bank holding company will not be permitted to become a financial holding company and no new activities authorized under the Gramm-Leach-Bliley Act may be commenced by a holding company or by a bank financial subsidiary if any of its bank subsidiaries received less than a satisfactory Community Reinvestment Act rating in its latest Community Reinvestment Act examination. The Bank received a “Satisfactory” rating in its last CRA examination, which was conducted as of April 17, 2017.

The Federal Reserve is considering changes to the regulations under the Community Reinvestment Act. The Company will monitor any proposed changes as they make their way through the agency rulemaking process.

Consumer Protection Laws

The Bank is subject to a number of federal and state laws designed to protect borrowers and promote lending to various sectors of the economy and population. These laws include the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Truth in Lending Act, the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act, the Fair Debt Collection Act and state law counterparts.

Federal law currently contains extensive customer privacy protection provisions. Under these provisions, a financial institution must provide to its customers, at the inception of the customer relationship and then again if any changes are made, the institution’s policies and procedures regarding the handling of customers’ nonpublic personal financial information. These provisions also provide that, except for certain limited exceptions, an institution may not provide such personal information to unaffiliated third parties unless the institution discloses to the customer that such information may be so provided and the customer is given the opportunity to opt out of such disclosure. Federal law makes it a criminal offense, except in limited circumstances, to obtain or attempt to obtain customer information of a financial nature by fraudulent or deceptive means.

Additional Legislative and Regulatory Matters

The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “USA PATRIOT Act”) required each financial institution: (i) to establish an anti-money laundering program; (ii) to establish due diligence policies, procedures and controls with respect to its private banking accounts involving foreign individuals and certain foreign banks; and (iii) to avoid establishing, maintaining, administering or managing correspondent accounts in the United States for, or on behalf of, foreign banks that do not have a physical presence in any country. The USA PATRIOT Act also required the Secretary of the Treasury to prescribe by regulation minimum standards that financial institutions must follow to verify the identity of customers, both foreign and domestic, when a customer opens an account. In addition, the USA PATRIOT Act encouraged cooperation among financial institutions, regulatory authorities and law enforcement authorities with respect to individuals, entities and organizations engaged in, or reasonably suspected of engaging in, terrorist acts or money laundering activities.

The Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) mandated for public companies, such as Uwharrie Capital Corp, a variety of reforms intended to address corporate and accounting fraud and provided for the establishment of the Public Company Accounting Oversight Board (“PCAOB”), which enforces auditing, quality control and independence standards for firms that audit SEC-reporting companies. Sarbanes-Oxley imposed higher standards for auditor independence and restricted the provision of consulting services by auditing firms to companies they audit and required that certain audit partners be rotated periodically. It also requires chief executive officers and chief financial officers, or their equivalents, to certify the accuracy of periodic reports filed with the SEC, subject to civil

11

and criminal penalties if they knowingly or willfully violate this certification requirement, and increases the oversight and authority of audit committees of publicly traded companies.

Fiscal and Monetary Policy

Banking is a business which depends on interest rate differentials for success. In general, the difference between the interest paid by a bank on its deposits and its other borrowings, and the interest received by a bank on its loans and securities holdings, constitutes the significant portion of a bank’s earnings. Thus, our earnings and growth will be subject to the influence of economic conditions generally, both domestic and foreign, and also to the monetary and fiscal policies of the United States and its agencies, particularly the Federal Reserve. The Federal Reserve regulates the supply of money through various means, including open market dealings in United States government securities, the discount rate at which banks may borrow from the Federal Reserve and the reserve requirements on deposits. The nature and timing of any changes in such policies and their effect on our business and results of operations cannot be predicted.

Current and future legislation and the policies established by federal and state regulatory authorities will affect our future operations. Banking legislation and regulations may limit our growth and the return to their investors by restricting certain of our activities.

In addition, capital requirements could be changed and have the effect of restricting the activities of the Company or requiring additional capital to be maintained. The Company cannot predict with certainty what changes, if any, will be made to existing federal and state legislation and regulations or the effect that such changes may have on our business and results of operations.

Federal Home Loan Bank System

The FHLB System consists of 12 district Federal Home Loan Banks (“FHLBs”) subject to supervision and regulation by the Federal Housing Finance Agency (“FHFA”). The FHLBs provide a central credit facility primarily for member institutions. As a member of the FHLB of Atlanta, the Bank is required to acquire and hold shares of capital stock in the FHLB of Atlanta. The Bank was in compliance with this requirement with investment in FHLB of Atlanta stock of $635,000 at December 31, 2019. The FHLB of Atlanta serves as a reserve or central bank for its member institutions within its assigned district. It is funded primarily from proceeds derived from the sale of consolidated obligations of the FHLB System. It offers advances to members in accordance with policies and procedures established by the FHFA and the Board of Directors of the FHLB of Atlanta. Long-term advances may only be made for the purpose of providing funds for residential housing finance, small businesses, small farms and small agribusinesses.

Real Estate Lending Evaluations

The federal regulators have adopted uniform standards for evaluations of loans secured by real estate or made to finance improvements to real estate. Banks are required to establish and maintain written internal real estate lending policies consistent with safe and sound banking practices and appropriate to the size of the institution and the nature and scope of its operations. The regulations establish loan to value ratio limitations on real estate loans. The Bank’s loan policies establish limits on loan to value ratios that are equal to or less than those established in such regulations.

Commercial Real Estate Concentrations

Lending operations of commercial banks may be subject to enhanced scrutiny by federal banking regulators based on a bank’s concentration of commercial real estate loans. The federal banking regulators have issued guidance to remind financial institutions of the risk posed by commercial real estate, or CRE, lending concentrations. CRE loans generally include land development, construction loans, and loans secured by multifamily property, and nonfarm, nonresidential real property where the primary source of repayment is derived from rental income associated with the property. The guidance prescribes the following guidelines for its examiners to help identify institutions that are potentially exposed to significant CRE risk and may warrant greater supervisory scrutiny:

• total reported loans for construction, land development and other land (“C&D”) represent 100% or more of the institution’s total capital; or

• total CRE loans represent 300% or more of the institution’s total capital, and the outstanding balance of the institution’s CRE loan portfolio has increased by 50% or more.

As of December 31, 2019, our C&D concentration as a percentage of risk-based capital totaled 52.8% and our CRE concentration, net of owner-occupied loans, as a percentage of risk-based capital totaled 163.8%.

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Limitations on Incentive Compensation

In October 2009, the Federal Reserve issued proposed guidance designed to help ensure that incentive compensation policies at banking organizations do not encourage excessive risk-taking or undermine the safety and soundness of the organization. In connection with the proposed guidance, the Federal Reserve announced that it would review incentive compensation arrangements of bank holding companies such as Uwharrie Capital Corp as part of the regular, risk-focused supervisory process.

In June 2010, the Federal Reserve issued the incentive compensation guidance in final form and was joined by the FDIC, and the Office of the Comptroller of the Currency. The final guidance, which covers all employees that have the ability to materially affect the risk profile of an organization, either individually or as part of a group, is based upon the key principles that a banking organization’s incentive compensation arrangements should (i) provide employees incentives that appropriately balance risk and reward and, thus, do not encourage risk-taking beyond the organization’s ability to effectively identify and manage risks, (ii) be compatible with effective internal controls and risk management, and (iii) be supported by strong corporate governance, including active and effective oversight by the organization’s board of directors. Any deficiencies in compensation practices that are identified may be incorporated into the organization’s supervisory ratings, which can affect its ability to make acquisitions or perform other actions. The guidance provides that enforcement actions may be taken against a banking organization if its incentive compensation arrangements or related risk-management control or governance processes pose a risk to the organization’s safety and soundness and the organization is not taking prompt and effective measures to correct the deficiencies.

Economic Environment

The policies of regulatory authorities, including the monetary policy of the Federal Reserve, have a significant effect on the operating results of bank holding companies and their subsidiaries. Among the means available to the Federal Reserve to affect the money supply are open market operations in U.S. government securities, changes in the discount rate on member bank borrowings and changes in reserve requirements against member bank deposits. These means are used in varying combinations to influence overall growth and distribution of bank loans, investments and deposits, and their use may affect interest rates charged on loans or paid on deposits.

The Federal Reserve’s monetary policies have materially affected the operating results of commercial banks in the past and are expected to continue to do so in the future. The nature of future monetary policies and the effect of these policies on our business and earnings cannot be predicted.

Evolving Legislation and Regulatory Action

General. New laws or regulations or changes to existing laws and regulations, including changes in interpretation or enforcement, could materially adversely affect our financial condition or results of operations. As a result, the overall financial impact on the Company and the Bank cannot be anticipated at this time.

Dodd-Frank Act. In 2009, many emergency government programs enacted in 2008 in response to the financial crisis and the recession slowed or wound down, and global regulatory and legislative focus generally moved to a second phase of broader regulatory reform and a restructuring of the entire financial regulatory system. The Dodd-Frank Act was signed into law in 2010 and implements many new changes in the way financial and banking operations are regulated in the United States, including through the creation of a new resolution authority, mandating higher capital and liquidity requirements, requiring banks to pay increased fees to regulatory agencies and numerous other provisions intended to strengthen the financial services sector. The Dodd-Frank Act provided for the creation of the Financial Stability Oversight Council (“FSOC”), which is charged with overseeing and coordinating the efforts of the primary U.S. financial regulatory agencies (including the Federal Reserve, the FDIC and the SEC) in establishing regulations to address systemic financial stability concerns. The Dodd-Frank Act also provided for the creation of the Consumer Financial Protection Bureau (the “CFPB”), a consumer financial services regulator. The CFPB is authorized to prevent unfair, deceptive and abusive practices and ensure that consumers have access to markets for consumer financial products and services and those markets are fair, transparent and competitive.

Tax Cuts and Jobs Act of 2017. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was signed into law. The Tax Act includes a number of provisions that impact the Company, including the following:

• Tax Rate. The Tax Act replaces the graduated corporate tax rates applicable under prior law, which imposed a maximum tax rate of 35%, with a reduced 21% flat tax rate.

• Employee Compensation. A “publicly held corporation” is not permitted to deduct compensation in excess of $1 million per year paid to certain employees. The Tax Act eliminates certain exceptions to the $1 million limit applicable under prior to

13

law related to performance-based compensation, such as equity grants and cash bonuses that are paid only on the attainment of performance goals.

• Business Asset Expensing. The Tax Act allows taxpayers immediately to expense the entire cost (instead of only 50%, as under prior law) of certain depreciable tangible property and real property improvements acquired and placed in service after September 27, 2017 and before January 1, 2023 (with an additional year for certain property). This 100% “bonus” depreciation is phased out proportionately for property placed in service on or after January 1, 2023 and before January 1, 2027 (with an additional year for certain property).  

• Interest Expense. The Tax Act limits a taxpayer’s annual deduction of business interest expense to the sum of (i) business interest income and (ii) 30% of “adjusted taxable income,” defined as a business’s taxable income without taking into account business interest income or expense, net operating losses, and, for 2018 through 2021, depreciation, amortization and depletion.

Economic Growth, Regulatory Relief, and Consumer Protection Act. On May 24, 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act (“EGRRCPA”) was signed into law, which amended provisions of the Dodd-Frank Act and was intended to ease, and better tailor, regulation, particularly with respect to smaller-sized institutions such as the Company.  EGRRCPA’s highlights include, among other things: (i) exempts banks with less than $10 billion in assets from the ability-to-repay requirements for certain qualified residential mortgage loans held in portfolio; (ii) not requiring appraisals for certain transactions valued at less than $400,000 in rural areas; (iii) clarifies that, subject to various conditions, reciprocal deposits of another depository institution obtained using a deposit broker through a deposit placement network for purposes of obtaining maximum deposit insurance would not be considered brokered deposits subject to the FDIC’s brokered-deposit regulations; (iv) raises eligibility for the 18-month exam cycle from $1 billion to banks with $3 billion in assets; and (v) simplifies capital calculations by requiring regulators to establish for institutions under $10 billion in assets a community bank leverage ratio (tangible equity to average consolidated assets) at a percentage not less than 8% and not greater than 10% that such institutions may elect to replace the general applicable risk-based capital requirements for determining well capitalized status. On September 17, 2019, the federal banking agencies passed a final rule on the community bank leverage ratio, setting the minimum required community bank leverage ratio at 9%. The rule went into effect on January 1, 2020. In addition, the Federal Reserve Board was required to raise the asset threshold under its Small Bank Holding Company Policy Statement from $1 billion to $3 billion for bank or savings and loan holding companies that are exempt from consolidated capital requirements, provided that such companies meet certain other conditions such as not engaging in significant nonbanking activities and not having a material amount of debt or equity securities outstanding (other than trust preferred securities) that are registered with the Securities and Exchange Commission.  Consistent with EGRRCPA, the Federal Reserve passed an interim final rule that became effective on August 30, 2018, to increase the asset threshold to $3 billion for qualifying for such policy statement.

Future Legislation

The Company cannot predict what legislation might be enacted or what regulations might be adopted, or if enacted or adopted, the effect thereof on the Company’s operations.

Item 1A. Risk Factors.

Item not required for smaller reporting companies.

Item 1B. Unresolved Staff Comments.

Item not required for smaller reporting companies.

Item 2. Properties.

The Company’s executive office is located at 132 North First Street, Albemarle, North Carolina, where the Company owns a three-building complex located at 130-134 North First Street in Albemarle. This complex houses the Company’s offices and meeting rooms and is also the location of the Bank’s subsidiary, Strategic Alliance.

The Bank’s Main Office is located at 167 North Second Street, Albemarle, North Carolina. A portion of the Main Office facility leased since it opened in 1984 was purchased in 2009. Its administrative and executive offices occupy an adjoining building, purchased in 1991. The Bank owns a commercial building which houses some of its operations offices and parking lot adjacent to its Main Office. The Bank also acquired a commercial building in downtown Albemarle in December 2001 that is held for future

14

expansion. The Bank acquired a lot in Montgomery County in 2003 that is held as a potential ATM site. During 2009 the Bank acquired property in downtown Albemarle for future expansion.

The Bank owns its other banking locations at 710 North First Street, which houses the Village Branch, and its East Albemarle Branch at 800 Highway 24-27 Bypass, both located in Albemarle. It also owns a branch office located at 107 South Main Street in Norwood, North Carolina and a branch located at 416 West Main Street in Locust, North Carolina. The Bank leases its branch office at 224 North Main Street in Oakboro, North Carolina. The Bank acquired property in Richfield, North Carolina for future expansion.

In Cabarrus County, the Bank owns full service branch offices located at 25 Palaside Drive, N.E., Concord, North Carolina and at 1490 South Main Street, Mt. Pleasant, North Carolina and also owns property adjacent to the Mt. Pleasant banking office located at 1480 South Main Street. The Bank owns an office at 700 North Church Street in Concord, North Carolina where it previously provided banking services, which currently serves as a loan production office.

In Anson County, the Bank owns its banking facility located at 211 South Greene Street, Wadesboro, North Carolina and also owns an ATM site at 426 East Caswell Street, Wadesboro, North Carolina. The Bank purchased a lot in Anson County 2006 for a future branch location.

In Mecklenburg County, the Bank leases its loan production office located at 141 Providence Road, Charlotte, North Carolina and leases its banking facility located at 5231 Piper Station Drive, Suite 100, Charlotte, NC 28277.

The Bank leases an additional wealth advisory office in Asheboro, North Carolina located at 220 Sunset Avenue.

All of the Bank’s existing offices are fully equipped and have adequate parking and drive-up banking facilities, with the exception of the Bank’s loan production offices, the Main Office in Albemarle, and the banking facility in Charlotte, which do not have drive-up facilities.

Item 3. Legal Proceedings.

In the ordinary course of operations, the Company and the Bank are at times involved in legal proceedings. In the opinion of management, as of December 31, 2019 there are no material pending legal proceedings to which the Company, or any of its subsidiaries, is a party, or of which any of their property is the subject.

Item 4. Mine Safety Disclosures.

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

It is the philosophy of Uwharrie Capital Corp to promote a strong base of local shareholders. While bid and asked prices for the Company’s common stock are quoted on the OTC Pink marketplace through www.otcmarkets.com, operated by OTC Market Groups, Inc. and under the symbol UWHR, trading is limited and sporadic with most trades taking place in privately negotiated transactions. Management makes every reasonable effort to match willing buyers with willing sellers as they become known for the purpose of private negotiations for the purchase and sale of the Company’s common stock. The Company has an independent valuation of its common stock performed on an annual basis and makes this valuation available to interested shareholders in order to promote fairness and market efficiency in privately negotiated transactions.

Holders

On February 7, 2020, there were approximately 2,642 shareholders of record of the Company’s common stock. This number does not include shareholders for whom shares are held in “nominee” or “street” name.

Dividends

There were no cash dividends declared on the Company’s common stock in 2019 or 2018.  The timing and amount of cash dividends paid depends on the Company’s earnings, capital requirements, financial condition and other relevant factors. See “Payment of Dividends and Other Restrictions” under Item 1 of this Report for more information on restrictions on the Company’s ability to

15

declare and pay dividends. The Company can offer no assurance that the board of directors will declare or pay cash dividends in any future period.

Recent Sales of Unregistered Securities

None.

Securities Authorized for Issuance under Equity Compensation Plans

See Item 12 of this Report for disclosure regarding securities authorized for issuance and equity compensation plans required by Item 201(d) of Regulation S-K.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The following table sets forth information with respect to shares of common stock repurchased by the Company during each of the three months in the quarterly period ended December 31, 2019.

	(a) Total Number of Shares Purchased		(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Program (1)		(d) Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans
October 1, 2019 Through October 31, 2019		—	$	—		—	$	—
November 1, 2019 Through November 30, 2019		6,696	$	5.50		—	$	—
December 1, 2019 Through December 31, 2019		11,180	$	5.56		—	$	—
Total		17,876	$	5.54		—	$	—

(1) Trades of the Company’s common stock occur in the Over-the-Counter market from time to time. The Company also has in place a Stock Repurchase Plan that provides liquidity to its shareholders in the event a willing buyer is not available to purchase shares that are offered for sale. The Company is under no obligation to purchase shares offered; however, it will accommodate such offers as its Stock Repurchase Plan allows.

Item 6. Selected Financial Data.

Item not required for smaller reporting companies.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation.

Incorporated by reference to the Company’s Annual Report to Shareholders for the fiscal year ended December 31, 2019.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk.

Item not required for smaller reporting companies.

Item 8. Financial Statements and Supplementary Data.

Incorporated by reference to the Company’s Annual Report to Shareholders for the fiscal year ended December 31, 2019.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

At the end of the period covered by this Report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Securities Exchange Act Rule 13a-15.

16

Based upon that evaluation, the Chief Executive Officer and Principal Financial Officer concluded that the Company’s disclosure controls and procedures were effective (1) to provide reasonable assurance that information required to be disclosed by the Company in the reports filed or submitted by it under the Securities Exchange Act was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) to provide reasonable assurance that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Principal Financial Officer, as appropriate to allow for timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s Chief Executive Officer and Principal Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles. Management has made a comprehensive review, evaluation and assessment of the Company’s internal control over financial reporting as of December 31, 2019. In making its assessment of internal control over financial reporting, management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission’s (“COSO”) Internal Control Integrated Framework 2013. In accordance with Section 404 of the Sarbanes-Oxley Act of 2002, management makes the following assertions:

Management has implemented a process to monitor and assess both the design and operating effectiveness of internal control over financial reporting.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Based on management’s assessment pursuant to the COSO Internal Control Integrated Framework 2013, the Company believes that, as of December 31, 2019, the Company’s internal control over financial reporting is effective.

This Annual Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to applicable Securities and Exchange Commission rules.

Changes in Internal Control over Financial Reporting

Management of the Company has evaluated, with the participation of the Company’s Chief Executive Officer and Principal Financial Officer, changes in the Company’s internal controls over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the fourth quarter of 2019. In connection with such evaluation, the Company has determined that there have been no changes in internal control over financial reporting during the fourth quarter of 2019 that have materially affected or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9B. Other Information.

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

Incorporated by reference to the Company’s definitive proxy statement for the 2020 Annual Meeting of Shareholders.

The Company has adopted a Code of Business Conduct and Ethics that applies to, among others, its Principal Executive Officer and Principal Financial Officer. The Company’s Code of Business Conduct Ethics is available on the Company’s website at https://www.uwharrie.com/about/investor.

Item 11. Executive Compensation.

Incorporated by reference to the Company’s definitive proxy statement for the 2020 Annual Meeting of Shareholders.

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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Incorporated by reference to the Company’s definitive proxy statement for the 2020 Annual Meeting of Shareholders.

The following table sets forth information with respect to certain equity compensation plans at December 31, 2019.

Equity Compensation Plan Information

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column(a))
	(a)		(b)		(c)
Equity compensation plans approved by security    holders		—	$	—		—
Equity compensation plans not approved by    security holders	N/A		N/A		N/A
Total		—	$	—		—

A description of the Company’s equity compensation plans is presented in Note 16 to the Company’s consolidated financial statements incorporated by reference into Item 8 of this report.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Incorporated by reference to the Company’s definitive proxy statement for the 2020 Annual Meeting of Shareholders.

Item 14. Principal Accounting Fees and Services.

Incorporated by reference to the Company’s definitive proxy statement for the 2020 Annual Meeting of Shareholders.

PART IV

Item 15. Exhibits, Financial Statement Schedules.

The following documents are filed as part of this report:

1. Financial statements from the Registrant’s Annual Report to Shareholders for the fiscal year ended December 31, 2019, which are incorporated herein by reference:

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

Consolidated Statements of Income for the years ended December 31, 2019, 2018 and 2017.

Consolidated Statements of Comprehensive Income for the years ended December 31, 2019, 2018 and 2017.

Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2019, 2018 and 2017.

Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017.

Notes to Consolidated Financial Statements.

Report of Independent Registered Public Accounting Firm.

2. Financial statement schedules required to be filed by Item 8 of this Form:

None

3. Exhibits

18

UWHARRIE CAPITAL CORP

Exhibit Index

Exhibit Number	Description of Exhibit
3.1	Registrant’s Articles of Incorporation (Incorporated by reference to Exhibit 3(a) of Registrant’s Annual Report on Form 10-K filed with SEC on March 1, 2017)
3.2	Registrant’s By-laws (Incorporated by reference to Exhibit 3(b) of Registrant’s Annual Report on Form 10-K filed with SEC on March 1, 2017)
3.3	Articles of Amendment effective April 24, 1997 (filed herewith)
3.4	Articles of Amendment effective November 1, 1999 (Incorporated by reference to Exhibit 3(c) of Registrant’s Annual Report on Form 10-K filed with SEC on March 1, 2017)
3.5	Articles of Amendment effective May 31, 2000 (Incorporated by reference to Exhibit 3(d) of Registrant’s Annual Report on Form 10-K filed with SEC on March 1, 2017)
3.6	Articles of Amendment effective December 19, 2008 (Incorporated by reference to Exhibit 3.1 of Registrant’s Current Report on Form 8-K filed with SEC on December 29, 2008)
4.1	Form of common stock certificate (Incorporated by reference to Exhibit 4(a) of Registrant’s Annual Report on Form 10-K filed with SEC on March 1, 2017)
4.2	Description of Registrant’s Securities Registered under Section 12 of the Exchange Act(filed herewith)
10.1	2006 Incentive Stock Option Plan, a compensatory plan (Incorporated by reference to Exhibit 10.1 of Registrant’s Quarterly Report on Form 10-Q filed with SEC on August 13, 2007)
10.2	2006 Employee Stock Purchase Plan, a compensatory plan (Incorporated by reference to Exhibit 10.2 of Registrant’s Quarterly Report on Form 10-Q filed with SEC on August 13, 2007)
10.3	Nonqualified Deferred Compensation Plan and Executive Supplemental Retirement Plan Agreement between Uwharrie Capital Corp and Roger L. Dick, a compensatory plan (Incorporated by reference to Exhibit 10.1 of Registrant’s Current Report on Form 8-K filed with SEC on December 31, 2008)
10.4	Nonqualified Deferred Compensation Plan and Executive Supplemental Retirement Plan Agreement between Uwharrie Capital Corp and Brendan P. Duffey, a compensatory plan (Incorporated by reference to Exhibit 10.2 of Registrant’s Current Report on Form 8-K filed with SEC on December 31, 2008)
10.5	Nonqualified Deferred Compensation Plan and Executive Supplemental Retirement Plan Agreement between Uwharrie Capital Corp and R. David Beaver, III, a compensatory plan (Incorporated by reference to Exhibit 10(e) of Registrant’s Annual Report on Form 10-K filed with SEC on March 1, 2017)
10.6	Change in Control Severance Agreement dated January 1, 2015, between the Registrant and R. David Beaver, III, a compensatory plan (Incorporated by reference to Exhibit 10.1 of Registrant’s Current Report on Form 8-K filed with SEC on June 30, 2015)
10.7	2015 Stock Grant Plan (Incorporated by reference to Exhibit 4.1 of Registrant’s Form S-8 filed with SEC on October 27, 2015)
13	2019 Annual Report to Shareholders (filed herewith)
21	Subsidiaries of the Registrant (filed herewith)
23	Consent of Dixon Hughes Goodman LLP (filed herewith)

19

31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
32	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
101	Interactive data files providing financial information from the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2019, in XBRL (eXtensible Business Reporting Language) (filed herewith)

20

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

UWHARRIE CAPITAL CORP
By:	/s/ Roger L. Dick
	Roger L. Dick, Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

/s/ Roger L. Dick		March 4, 2020
Roger L. Dick, Chief Executive Officer
/s/ R. David Beaver, III		March 4, 2020
R. David Beaver, III, Principal Financial Officer
/s/ Merlin Amirtharaj		March 4, 2020
Merlin Amirtharaj, Director
/s/ Dean M. Bowers		March 4, 2020
Dean M. Bowers, Director
/s/ Joe S. Brooks		March 4, 2020
Joe S. Brooks, Director
/s/ James O. Campbell		March 4, 2020
James O. Campbell, Director
/s/ Tara G. Eudy		March 4, 2020
Tara G. Eudy, Director
/s/ Deidre B. Foster	March 4, 2020
Deidre B. Foster, Director
/s/ Allen K. Furr		March 4, 2020
Allen K. Furr, Director
/s/ Thomas M. Hearne, Jr.		March 4, 2020
Thomas M. Hearne, Jr., Director
/s/ Matthew R. Hudson		March 4, 2020
Matthew R. Hudson, Director
/s/ Harvey H. Leavitt, III		March 4, 2020
Harvey H. Leavitt, III, Director
/s/ W. Chester Lowder		March 4, 2020
W. Chester Lowder, Director
/s/ Wesley A. Morgan		March 4, 2020
Wesley A. Morgan, Director
/s/ Cynthia L. Mynatt		March 4, 2020
Cynthia L. Mynatt, Director

21

/s/ James E. Nance	March 4, 2020
James E. Nance, Director
/s/ Chris M. Poplin	March 4, 2020
Chris M. Poplin, Director
/s/ Frank A. Rankin, III	March 4, 2020
Frank A. Rankin, III, Director
/s/ Randy T. Russell	March 4, 2020
Randy T. Russell, Director
/s/ Vernon A. Russell	March 4, 2020
Vernon A. Russell, Director
/s/ Matthew A. Shaver	March 4, 2020
Matthew A. Shaver, Director

22

EX-3.3

EXHIBIT 3.3

ARTICLES OF AMENDMENT OF STANLY CAPITAL CORP

The undersigned corporation hereby submits these Articles of Amendment for the purpose of amending its Articles of Incorporation:

1. The name of the corporation is Stanly Capital Corp.

2. The Articles of Incorporation of the corporation are hereby amended by deleting Article I thereof and inserting in lieu thereof the following Article I:

“The name of the corporation is Uwharrie Capital Corp (herein referred to as the “Corporation”).”

3. The foregoing amendment was adopted on the 22^nd day of April, 1997, by shareholder action pursuant to §55-10-06 of the General Statutes of North Carolina.

This the 22^nd day of April, 1997.

STANLY CAPITAL CORP

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

Prepared by and return to:

Alexander M. Donaldson

For the firm of:

Moore & Van Allen, PLLC

Suite 1700

One Hannover Square

Fayetteville Street Mall

Raleigh, North Carolina 27601

Telephone: (919) 821-6242

EX-4.2

Exhibit 4.2

description of the registrant’s securities

registered UNDER section 12 of the

securities exchange act of 1934

The following description sets forth certain material terms and provisions of the securities of Uwharrie Capital Corp (the “Company,” “we,” “us,” or “our”), that are registered under Section 12 of the Securities Exchange Act of 1934. The following summary does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the applicable provisions of our articles of incorporation, as amended, and our bylaws, copies of which are incorporated by reference as an exhibit to the Annual Report on Form 10-K of which this Exhibit 4.2 is a part. We encourage you to read our articles of incorporation, as amended, and our bylaws for additional information.

Description of Common Stock, $1.25 Par Value Per Share

General. Outstanding shares of our common stock are validly issued, fully paid and non-assessable. Each share of our common stock has the same relative rights and is identical in all respects to each other share of our common stock.

Voting Rights. Each share of our common stock entitles the holder thereof to one vote on all matters upon which shareholders have the right to vote. Our shareholders are not entitled to cumulate their votes for the election of directors. Directors are elected by a plurality of votes cast. In addition, our board of directors is classified into three groups so that approximately one-third of the directors are elected each year. One of the effects of these “staggered” director terms is that it makes it more difficult to affect a change in majority control of our board of directors.

Liquidation. In the event of any liquidation, dissolution, or winding up of our affairs, the holders of shares of our common stock are entitled to receive, after payment of all debts and liabilities and the liquidation preference of any then-outstanding preferred stock, all of our remaining assets available for distribution in cash or in kind.

Dividends. Subject to preferences to which holders of any shares of our preferred stock may be entitled, holders of our common stock are entitled to receive ratably any dividends that may be declared from time to time by the board of directors out of funds legally available for that purpose. Under North Carolina law, cash dividends may not be paid if a corporation will not be able to pay its debts as they become due in the usual course of business after making such cash dividend distribution or the corporation’s total assets would be less than the sum of its total liabilities plus the amount that would be needed to satisfy certain preferential liquidation rights. It is the current policy of the Board of Governors of the Federal Reserve System (the “Federal Reserve”) that bank holding companies should pay cash dividends on capital stock only out of net income available over the past year and only if prospective earnings retention is consistent with the organization’s expected future needs and financial condition.

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Our ability to pay cash dividends to the holders of shares of our common stock is, at the present time and for the foreseeable future, largely dependent upon the amount of cash dividends that our subsidiariesmay pay to us. North Carolina commercial banks, such as our consolidated subsidiary, Uwharrie Bank, are subject to legal limitations on the amounts of dividends they are permitted to pay. Also, as an insured depository institution, Uwharrie Bank is prohibited from making capital distributions, including the payment of dividends, if, after making such distribution, the institution would become “undercapitalized,” as such term is defined in applicable law and regulations. The declaration and payment of future dividends to holders of our common stock will also depend upon our earnings and financial condition, the capital requirements of Uwharrie Bank, regulatory conditions, and other factors as our board of directors may deem relevant.

No Preemptive Rights, Conversion Rights, Redemption Rights, or Sinking Fund. Holders of our common stock do not have preemptive, conversion, or redemption rights; our common stock does not have any sinking fund provisions.

Restrictions on Ownership. The Bank Holding Company Act of 1956 (the “BHCA”) requires any “bank holding company,” as defined in the BHCA, to obtain the approval of the Federal Reserve before acquiring 5% or more of our voting securities, which includes our common stock. Any person, other than a bank holding company, is required to obtain the approval of the Federal Reserve before acquiring 10% or more of our common stock under the Change in Bank Control Act. Any holder of 25% or more of our voting common stock, or a holder of 5% or more if such holder otherwise exercises a “controlling influence” over us, is subject to regulation as a bank holding company under the BHCA.

  Preferred Stock. Under our articles of incorporation, as amended, our board of directors, without further action by our shareholders, is authorized to issue shares of preferred stock in one or more series. Our board of directors may fix the rights, preferences and privileges of the preferred stock, along with any limitations or restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences of each series of preferred stock. Depending upon the rights prescribed for a series of preferred stock, the issuance of preferred stock could have an adverse effect on the voting power of the holders of common stock and could adversely affect holders of common stock by delaying or preventing a change in control, making removal of our present management more difficult, or imposing restrictions upon the payment of dividends and other distributions to the holders of common stock.

Charter and Bylaw Provisions Having Potential Anti-Takeover Effects

The following paragraphs summarize certain provisions of our articles of incorporation and bylaws that may have the effect, or be used as a means, of delaying or preventing attempts to acquire or take control of the Company, or to remove or replace incumbent directors, that are not first approved by our board of directors, even if those proposed actions are favored by our shareholders. All references to our articles of incorporation reference such articles as amended to date. 

Authorized but Unissued Shares. Our board of directors is authorized to approve the issuance of shares of our common stock or preferred stock from time to time and, in the case of

2

preferred stock, to create separate series of preferred stock within the class, and to determine the number of shares, designations, terms, relative rights, preferences and limitations of the preferred stock, or of shares within each series of preferred stock, at the time of issuance, all by action of the board. Those provisions give our board of directors considerable flexibility to effect, among other transactions, financings, acquisitions, stock dividends, stock splits, and grants of stock options. However, the board’s authority also could be used, consistent with the board’s fiduciary duty, to deter future attempts to gain control of the Company by issuing additional common stock, or by issuing a series of preferred stock, to persons friendly to management in order to attempt to block a tender offer, merger, or other transaction by which a third party seeks to gain control.

Super-majority Vote Requirement for Certain Business Combinations. The Company’s articles of incorporation require that the affirmative vote of 66 and 2/3 percent of all votes entitled to be cast on certain matters be obtained before such matter is approved by our shareholders. Such matters are (i) the merger of the Company with any other corporation whether or not the Company is the surviving entity in such merger; (ii) the acquisition of all of the outstanding shares of any one or more classes or series of the Company’s capital stock pursuant to a share exchange; (iii) the sale, lease, exchange or other disposition of all, or substantially all, of the Company’s property and assets otherwise than in the usual and regular course of is business; or (iv) any proposal to dissolve the Company.  This super-majority vote requirement could tend to make the acquisition of the Company more difficult to accomplish without the cooperation or favorable recommendation of our board of directors.

Other Constituency Considerations. When evaluating business combinations or transactions and determining what is in the best interests of the Company and our shareholders, our articles of incorporation provide that our board of directors (or any individual member) may, but is not required, to consider: (i) the social and economic effects of the transaction or the matter to be considered on the Company and its subsidiaries, its and their employees, depositors, customers, and creditors, and the communities in which the Company and its subsidiaries operate or are located; (ii) the business and financial condition and earnings prospects of the acquiring person(s) or entity, including, but not limited to, debt service and other existing financial obligations, financial obligations to be incurred in connection with the acquisition, and other likely financial obligations of the acquiring person or entity, and the possible effect of such conditions upon the Company and its subsidiaries and the communities in which the Company and its subsidiaries operate or are located; (iii) the competence, experience, and integrity of the acquiring person(s) or entity and its or their management; and (iv) the prospects for successful conclusion of the business combination, offer or proposal.

Advance Notice of Director Nominations. Our bylaws provide that in order to be eligible for consideration at a meeting of shareholders, all nominations for election to the board of directors, other than those made by our nominating committee, must be in writing and delivered to our chief executive officer, president, or corporate secretary no later than December 1 of the year preceding the meeting of shareholders at which the nominee would stand for election.

Vacancies on our Board of Directors.  Our bylaws provide that any vacancy occurring in the board of directors, including without limitation a vacancy resulting from an increase in the

3

number of directors or from the failure by the shareholders to elect the full authorized number of directors, may be filled by the shareholders or by our board of directors, whichever group shall act first.  This means that our board of directors, subject to limits on our number of directors contained in our bylaws, may increase the size of the board without shareholder approval and appoint a director to fill the vacancy thereby created.

Special Meetings of Shareholders. Our bylaws provide that special meetings of our shareholders may be called by the Company’s chief executive officer, president, secretary, the chairman of our board of directors, or the board of directors.  Additionally, our bylaws provide that our board of directors will call a special meeting of shareholders upon the written request of the holders of not less than one-tenth of all the votes entitled to be cast on any issue proposed to be considered at such meeting.

Amendment of Bylaws. Subject to certain limitations under North Carolina law, our bylaws may be amended or repealed by either our board of directors or our shareholders. Therefore, our board of directors is authorized to amend or repeal bylaws without the approval of our shareholders. However, a bylaw adopted, amended or repealed by our shareholders may not be readopted, amended or repealed by the board alone unless our articles of incorporation or a bylaw adopted by our shareholders authorizes the board to adopt, amend or repeal that particular bylaw or the bylaws generally.

4

EX-13

Exhibit 13

Uwharrie Capital Corp

2019

ANNUAL REPORT TO SHAREHOLDERS

1

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2

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Description of Business

Uwharrie Capital Corp (the “Company”) is a North Carolina bank holding company. The Company was incorporated on February 24, 1993 to become the bank holding company for Uwharrie Bank (the “Bank”), formerly, known as Bank of Stanly, a North Carolina commercial bank chartered on September 28, 1983, and its three wholly-owned subsidiaries, The Strategic Alliance Corporation, BOS Agency, Inc., and Gateway Mortgage, Inc., a mortgage origination company. The Company also owns two non-bank subsidiaries, Uwharrie Investment Advisors, Inc., formerly known as Strategic Investment Advisors, Inc., and Uwharrie Mortgage, Inc.

The Bank engages in retail and commercial banking with ten physical banking offices in North Carolina. The Bank provides a wide range of banking services including deposit accounts, commercial, consumer, home equity and residential mortgage loans, safe deposit boxes, and electronic banking services.

On January 19, 2000, the Company completed its acquisition of Anson Bancorp, Inc. and its subsidiary, Anson Savings Bank. The savings bank retained its North Carolina savings bank charter and became a wholly-owned subsidiary of Uwharrie Capital Corp as Anson Bank & Trust Co. (“Anson”) and provided financial services to customers through one banking office in Anson County until September 1, 2013 when it was consolidated with and into the Bank. The former Anson office is now operated by the Bank.

On April 10, 2003, the Company capitalized a new wholly-owned subsidiary bank, Cabarrus Bank & Trust Company (“Cabarrus”), located in Concord, North Carolina. As of that date, Cabarrus purchased two branch offices located in Cabarrus County from the Bank to begin its operation. Cabarrus operated as a commercial bank and provided a full range of banking services. Cabarrus was consolidated into the Bank effective September 1, 2013. The former Cabarrus offices are now operated as branches of the Bank.

The Company and its subsidiaries are located in Stanly County, Anson County, Cabarrus County and Mecklenburg County. However, the Company intends to prudently expand its service area within the Charlotte Metropolitan and Uwharrie Lakes Regions of North Carolina.

Depository services offered by the Bank include personal and commercial checking, savings, money market, certificates of deposit accounts and individual retirement accounts, all tailored to meet customers’ needs. The Bank provides fixed and variable rate loans, which include mortgage, home equity, lines of credit, consumer and commercial loans. The Bank also offers internet banking, mobile banking, and 24-hour telephone banking, providing customers the convenience of access to account information, rate information and accessibility of funds transfers between accounts. Other services include MasterCard ® credit cards and a Visa ® check card which functions as a point-of-sale (POS) and automated teller machine (ATM) card. Customers can use the check card for purchases at virtually any merchant accepting Visa ® and ATMs displaying the STAR ® or CIRRUS ® networks regionally and worldwide, respectively.

Uwharrie Investment Advisors, Inc., an SEC registered investment advisory firm, provides portfolio management services to its customers. The Strategic Alliance Corporation (Strategic Alliance ®) is a broker-dealer registered with the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC). BOS Agency provides insurance products and is licensed in the state of North Carolina. Through Strategic Investment Group, a DBA for financial consultants registered with Private Client Services LLC, securities and insurance products are offered, including fixed annuities, long-term care products, Medicare supplement products, and life insurance products. Group insurance products are offered through an arrangement with Burchfield Insurance Group, Inc.

Uwharrie Investment Group: Securities and insurance products are offered through Private Client Services, LLC, 2225 Lexington Rd, Louisville, KY 40206, ph: 502-451-0600, Member FINRA and SIPC. Private Client Services, LLC and Uwharrie Capital Corp along with its affiliates and/or subsidiaries are separate, distinct, and unaffiliated entities. It is important to note that securities and insurance products are: NOT BANK DEPOSITS – NOT INSURED BY THE FDIC OR ANY FEDERAL GOVERNMENT AGENCY – NOT OBLICATIONS OF OR GUARANTEED BY ANY FINANCIAL INSTITUTION – SUBJECT TO RISK AND MAY LOSE VALUE.

Uwharrie Bank, Member FDIC, Equal Housing Lender.

3

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Financial Highlights

(Dollars in thousands, except per share amounts)	2019			2018			Percent Increase (Decrease)
For the year:
Net income	$	3,087		$	2,477			24.63	%
Net income (loss) available to common shareholders	$	2,523		$	1,907			32.30	%
Basic net income (loss) per common share (1)	$	0.35		$	0.26			38.46	%
Diluted net income (loss) per common share (1)	$	0.35		$	0.26			38.46	%
Weighted average common shares outstanding (diluted) (1)		7,199,262			7,229,333			(2.25	)%
At year-end:
Total assets	$	656,793		$	632,304			3.87	%
Total earning assets		607,161			583,631			4.03	%
Loans held for investment		357,950			369,970			(3.25	)%
Total interest-bearing liabilities		446,213			448,351			(0.48	)%
Shareholders’ equity		48,858			45,175			8.15	%
Book value per common share (1)	$	5.38		$	4.75			13.26	%
Averages for the year:
Total assets	$	645,681		$	612,403			5.43	%
Total earning assets		604,011			571,604			5.67	%
Loans held for investment		369,540			369,419			0.03	%
Total interest-bearing liabilities		440,758			428,025			2.97	%
Shareholders’ equity		47,993			44,468			7.93	%
Financial ratios (in percentage):
Return on average assets		0.48	%		0.40	%
Return on average shareholders’ equity		6.43	%		5.57	%
Average equity to average assets		7.43	%		7.26	%
Net interest margin (fully tax equivalent basis)		3.37	%		3.53	%
Allowance as % of loans at year-end		0.55	%		0.64	%
Allowance as % of nonperforming loans		67.82	%		227.38	%
Nonperforming loans to total loans		0.82	%		0.28	%
Nonperforming assets to total assets		0.52	%		0.33	%
Net loan charge-offs (recoveries) to average loans		(0.08	)%		0.05	%

(1) Net income per share, book value per share and shares outstanding at year-end for 2018 have been adjusted to reflect the 2% stock dividend in 2019.

Market for the Company’s Common Stock and Related Security Holder Matters

It is the philosophy of Uwharrie Capital Corp to promote a strong base of local shareholders. While bid and ask prices for the Company’s common stock are quoted on the OTC Pink marketplace through www.otcmarkets.com, operated by OTC Markets Group, Inc. under the symbol UWHR, trading is sporadic with trades also taking place in privately negotiated transactions. Management makes every reasonable effort to match willing buyers with willing sellers as they become known for the purpose of private negotiations for the purchase and sale of the Company’s common stock.

Shareholders needing information about purchasing or selling shares of Uwharrie Capital Corp should contact Tamara M. Singletary or Lisa E. Hartsell, Investor Relations at Uwharrie Capital Corp, 132 N. First Street, Post Office Box 338, Albemarle, NC 28002.

The Board of Directors adopts a dividend policy on an annual basis. For 2019, Uwharrie Capital Corp declared a 2% stock dividend on its outstanding common stock. The Board of Directors will determine an appropriate dividend, if any, on an annual basis, consistent with the capital needs of the Company.

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5

Report of Independent Registered Public Accounting Firm

To the shareholders and the board of directors of Uwharrie Capital Corp

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Uwharrie Capital Corp and Subsidiaries (the "Company") as of December 31, 2019 and 2018, the related consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash flows, for each of the three years in the period ended December 31, 2019, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Dixon Hughes Goodman LLP

We have served as the Company's auditor since 1996.

Charlotte, North Carolina

March 4, 2020

6

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 2019 and 2018

	2019			2018
	(dollars in thousands)
ASSETS
Cash and due from banks	$	7,520		$	4,473
Interest-earning deposits with banks		147,678			113,461
Securities available for sale, at fair value		88,524			91,299
Securities held to maturity (fair value $13,499 and $10,750, respectively)		13,428			10,837
Loans held for sale		2,946			4,800
Loans:
Loans held for investment		357,950			369,970
Less allowance for loan losses		(1,981	)		(2,374	)
Net loans held for investment		355,969			367,596
Premises and equipment, net		17,062			14,800
Interest receivable		1,666			1,763
Restricted stock		1,144			1,094
Bank owned life insurance		8,796			8,671
Other real estate owned		494			1,047
Prepaid assets		714			558
Other assets		10,852			11,905
Total assets	$	656,793		$	632,304
LIABILITIES
Deposits:
Demand noninterest-bearing	$	150,283		$	129,714
Interest checking and money market accounts		263,136			324,391
Savings deposits		57,136			54,784
Time deposits, $250,000 and over		55,682			7,920
Other time deposits		59,641			50,092
Total deposits		585,878			566,901
Short-term borrowed funds		626			1,190
Long-term debt		9,992			9,974
Interest payable		55			16
Other liabilities		11,384			9,048
Total liabilities		607,935			587,129
Off balance sheet items, commitments and contingencies (Note 13)
SHAREHOLDERS’ EQUITY
Common stock, $1.25 par value: 20,000,000 shares authorized; shares issued and    outstanding 7,095,920 and 7,126,541, respectively		8,870			8,908
Additional paid-in capital		12,784			12,885
Undivided profits		16,226			14,421
Accumulated other comprehensive income (loss)		323			(1,694	)
Total Uwharrie Capital shareholders’ equity		38,203			34,520
Noncontrolling interest		10,655			10,655
Total shareholders’ equity		48,858			45,175
Total liabilities and shareholders’ equity	$	656,793		$	632,304

The accompanying notes are an integral part of the consolidated financial statements.

7

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

Years Ended December 31, 2019, 2018 and 2017

	2019			2018			2017
	(dollars in thousands, except share
	and per share data)
Interest Income
Loans, including fees	$	18,977		$	18,205		$	16,569
Investment securities:
US Treasury		131			45			28
US Government agencies and corporations		1,490			1,405			1,507
State and political subdivisions non-taxable		408			434			439
State and political subdivisions taxable		59			47			47
Interest-earning deposits with banks and federal funds sold		2,702			1,737			750
Total interest income		23,767			21,873			19,340
Interest Expense
Interest checking and money market accounts		1,435			948			413
Savings deposits		102			91			49
Time deposits $250,000 and over		830			69			67
Other time deposits		620			204			185
Short-term borrowed funds		15			16			16
Long-term debt		563			554			547
Total interest expense		3,565			1,882			1,277
Net interest income		20,202			19,991			18,063
Provision for (recovery of) loan losses		(588	)		90			(236	)
Net interest income after provision for (recovery of) loan losses		20,790			19,901			18,299
Noninterest Income
Service charges on deposit accounts		1,348			1,220			1,169
Other service fees and commissions		2,687			2,621			2,674
Interchange and card transaction fees, net		826			648			656
Gain (loss) on sale of securities (includes reclassification of $35, $0 and $14 from    accumulated comprehensive income in 2019, 2018 and 2017, respectively)		(35	)		—			(14	)
Income from mortgage loan sales		3,835			2,980			3,345
Other income		344			810			595
Total noninterest income		9,005			8,279			8,425
Noninterest Expense
Salaries and employee benefits		17,122			16,180			14,710
Net occupancy expense		1,693			1,616			1,261
Equipment expense		720			734			597
Data processing costs		706			923			1,000
Loan cost		359			306			356
Foreclosed real estate expense		300			45			293
Professional fees and services		929			1,058			723
Marketing and donations		758			786			977
Electronic banking expense		424			401			362
Software amortization and maintenance		925			924			787
FDIC insurance		132			234			229
Other noninterest expense		1,869			1,917			2,009
Total noninterest expense		25,937			25,124			23,304
Income before income taxes		3,858			3,056			3,420
Income taxes (includes reclassification of ($7), $0 and ($4) from accumulated    other comprehensive income, respectively)		771			579			1,809
Net income	$	3,087		$	2,477		$	1,611
Consolidated net income	$	3,087		$	2,477		$	1,611
Less: Net income attributable to noncontrolling interest		(564	)		(570	)		(592	)
Net income attributable to Uwharrie Capital Corp and common shareholders		2,523			1,907			1,019
Net income per common share
Basic	$	0.35		$	0.26		$	0.14
Diluted	$	0.35		$	0.26		$	0.14
Weighted average common shares outstanding
Basic		7,199,262			7,229,333			7,427,036
Diluted		7,199,262			7,229,333			7,427,804

The accompanying notes are an integral part of the consolidated financial statements.

8

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Years Ended December 31, 2019, 2018 and 2017

	2019			2018			2017
	(dollars in thousands)
Net Income	$	3,087		$	2,477		$	1,611
Other comprehensive income (loss):
Unrealized gains (losses) on available for sale securities		2,584			(758	)		696
Related tax effect		(595	)		171			(340	)
Reclassification of losses recognized in net income		35			—			14
Related tax effect		(7	)		—			(4	)
Total other comprehensive income (loss)		2,017			(587	)		366
Comprehensive income		5,104			1,890			1,977
Less: Comprehensive income attributable to noncontrolling interest		(564	)		(570	)		(592	)
Comprehensive income attributable to Uwharrie Capital Corp	$	4,540		$	1,320		$	1,385

The accompanying notes are an integral part of the consolidated financial statements.

9

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Years Ended December 31, 2019, 2018 and 2017

	Numberof Common Shares Issued			Common Stock			Additional Paid-in Capital			Undivided Profits			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interest			Total
	(dollars in thousands, except share data)
Balance, December 31, 2016		7,050,315		$	8,813		$	12,540		$	12,867		$	(1,318	)	$	10,623		$	43,525
Net Income		—			—			—			1,019			—			592			1,611
Tax Cuts and Jobs Act of 2017, reclassification from AOCI to retained earnings,    tax effect		—			—			—			155			(155	)		—			—
Repurchase of common stock		(75,709	)		(95	)		(296	)		—			—			—			(391	)
2% stock dividend		138,247			173			580			(753	)		—			—			—
Cash paid – fractional shares		—			—			—			(6	)		—			—			(6	)
Other comprehensive income		—			—			—			—			366			—			366
Record preferred stock dividend series B (noncontrolling    interest)		—			—			—			—			—			(416	)		(416	)
Record preferred stock dividend series C (noncontrolling    interest)		—			—			—			—			—			(149	)		(149	)
Balance, December 31, 2017		7,112,853		$	8,891		$	12,824		$	13,282		$	(1,107	)	$	10,650		$	44,540
Net Income		—			—			—			1,907			—			570			2,477
Repurchase of common stock		(138,629	)		(173	)		(574	)		—			—			—			(747	)
2% stock dividend		138,939			174			586			(760	)		—			—			—
Cash paid – fractional shares		—			—			—			(8	)		—			—			(8	)
Stock options exercised		13,378			16			49			—			—			—			65
Other comprehensive income		—			—			—			—			(587	)		—			(587	)
Record preferred stock dividend series B (noncontrolling    interest)		—			—			—			—			—			(417	)		(417	)
Record preferred stock dividend series C (noncontrolling    interest)		—			—			—			—			—			(148	)		(148	)
Balance, December 31, 2018		7,126,541		$	8,908		$	12,885		$	14,421		$	(1,694	)	$	10,655		$	45,175
Net Income		—			—			—			2,523			—			564			3,087
Repurchase of common stock		(168,683	)		(211	)		(639	)		—			—			—			(850	)
2% stock dividend		138,062			173			538			(711	)		—			—			—
Cash paid – fractional shares		—			—			—			(7	)		—			—			(7	)
Other comprehensive income		—			—			—			—			2,017			—			2,017
Record preferred stock dividend series B (noncontrolling    interest)		—			—			—			—			—			(416	)		(416	)
Record preferred stock dividend series C (noncontrolling    interest)		—			—			—			—			—			(148	)		(148	)
Balance, December 31, 2019		7,095,920		$	8,870		$	12,784		$	16,226		$	323		$	10,655		$	48,858

The accompanying notes are an integral part of the consolidated financial statements.

10

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31, 2019, 2018 and 2017

	2019			2018			2017
	(dollars in thousands)
Cash flows from operating activities
Net income	$	3,087		$	2,477		$	1,611
Adjustments to reconcile net income to net cash provided by operating    activities:
Depreciation		1,074			1,067			857
Net amortization of security premiums/discounts AFS		555			767			850
Net amortization of security premiums/discounts HTM		139			146			147
Net amortization of loan servicing rights		831			663			733
Impairment of foreclosed real estate		237			(12	)		85
(Recovery) provision for loan losses		(588	)		90			(236	)
Deferred income taxes		15			(39	)		691
Net realized loss on sales / calls available for sale securities		35			—			14
Proceeds from sales of loans held for sale		126,011			96,718			97,360
Origination of loans held for sale		(124,973	)		(97,764	)		(96,684	)
(Gain) loss on sale of premises, equipment and other assets		(6	)		4			—
Increase in cash surrender value of life insurance		(125	)		(125	)		(124	)
(Gain) loss on sales of foreclosed real estate		40			(11	)		(35	)
(Increase) decrease in prepaid assets		(156	)		228			40
Net change in interest receivable		97			(54	)		(80	)
Net change in other assets		421			(422	)		(602	)
Net change in interest payable		39			(132	)		(3	)
Net change in other liabilities		(6	)		397			1,129
Net cash provided by operating activities		6,727			3,998			5,753
Cash flows from investing activities
Proceeds from sales, maturities, calls and paydowns of securities available for sale		27,270			7,853			16,185
Proceeds from sales, maturities, calls and paydowns of securities held to maturity		270			475			385
Purchase of securities available for sale		(22,466	)		(4,934	)		(6,338	)
Purchase of securities held to maturity		(3,000	)		—			—
Net (increase) decrease in loans		12,034			(13,433	)		(15,416	)
Purchases of life insurance investment		—			—			(1,525	)
Proceeds from sale of premises, equipment and other assets		189			4			—
Purchase of premises and equipment		(1,263	)		(829	)		(1,730	)
Proceeds from sales of foreclosed real estate		543			1,533			2,138
Net change in restricted stock		(50	)		(27	)		(15	)
Net cash provided by (used in) investing activities		13,527			(9,358	)		(6,316	)
Cash flows from financing activities
Net increase in deposit accounts		18,977			54,273			26,909
Net decrease in short-term borrowed funds		(564	)		(562	)		(410	)
Proceeds from long-term debt		9,992			440			—
Repayment of long-term debt		(9,974	)		—			(512	)
Repurchase of common stock, net		(850	)		(747	)		(391	)
Stock option exercise		—			65			—
Dividends on preferred stock		(564	)		(570	)		(592	)
Cash paid for fractional shares		(7	)		(8	)		(6	)
Net cash provided by financing activities		17,010			52,891			24,998
Increase in cash and cash equivalents		37,264			47,531			24,435
Cash and cash equivalents, beginning of year		117,934			70,403			45,968
Cash and cash equivalents, end of year	$	155,198		$	117,934		$	70,403
Supplemental disclosures of cash flow information
Interest paid	$	3,526		$	2,014		$	1,280
Income taxes paid		933			503			852
Supplemental schedule of non-cash activities
Net change in fair value of securities available for sale, net of tax		2,017			(587	)		366
Initial ROU asset for leased properties		2,256			—			—
Initial lease liability for leased properties		2,308			—			—
Loans transferred to foreclosed real estate		267			160			361
Company financed OREO		(70	)		—			(356	)
Mortgage servicing rights capitalized		684			313			586

The accompanying notes are an integral part of the consolidated financial statements.

11

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 1 - Significant Accounting Policies

Nature of Business

Uwharrie Capital Corp (the “Company”) was incorporated under North Carolina law for the purpose of becoming the holding company for Bank of Stanly (“Stanly”). On July 1, 1993, Stanly became a wholly-owned subsidiary of the Company through a one-for-one exchange of the common stock of Stanly for common stock of the Company. On September 1, 2013, Bank of Stanly changed its name to Uwharrie Bank (“Uwharrie” or the “Bank”).

Uwharrie was incorporated on September 28, 1983, under the laws of the State of North Carolina and began operations on January 26, 1984 in Albemarle, North Carolina. Deposits with Uwharrie are insured by the Federal Deposit Insurance Corporation (“FDIC”). Uwharrie is under regulation of the Federal Reserve, the FDIC and the North Carolina Commissioner of Banks. In North Carolina, Uwharrie has ten branch locations that provide a wide range of deposit accounts, commercial, consumer, home equity and residential mortgage loans, safe deposit boxes and automated banking.

In 1987, Uwharrie established a wholly-owned subsidiary, BOS Agency, Inc. (“BOS Agency”), which engages in insurance product sales. In 1989, Uwharrie established a second wholly-owned subsidiary, BOS Financial Corporation, for the purpose of conducting business as a “broker dealer” in securities. During 1993, BOS Financial Corporation changed its name to The Strategic Alliance Corporation (“Strategic Alliance”) and was registered as a “broker dealer” and is regulated by the Financial Industry Regulatory Authority (“FINRA”).

The Company formed a new subsidiary, Strategic Investment Advisors, Inc. (“SIA”), during 1998 to provide investment advisory and asset management services. This subsidiary is registered as an investment advisor with the Securities and Exchange Commission. During 2015, SIA changed its name to Uwharrie Investment Advisors, Inc. (“UIA”).

On January 19, 2000, the Company completed its acquisition of Anson BanCorp, Inc. and its subsidiary, Anson Savings Bank. The savings bank retained its North Carolina savings bank charter and became a wholly-owned subsidiary of Uwharrie Capital Corp as Anson Bank & Trust Company (“Anson”), operating out of its main office branch in Wadesboro. Anson was consolidated into Uwharrie Bank effective September 1, 2013.

On August 4, 2000, Uwharrie acquired another subsidiary, Gateway Mortgage, Inc. (“Gateway”), a mortgage origination company. This company is currently inactive and does not affect the Company’s consolidated financial statements.

On April 10, 2003, the Company capitalized a new wholly-owned subsidiary bank, Cabarrus Bank & Trust Company (“Cabarrus”), located in Concord, North Carolina. As of that date, Cabarrus purchased two branch offices located in Cabarrus County from Uwharrie to begin its operation. Cabarrus operated as a commercial bank and provided a full range of banking services. Cabarrus was consolidated into Uwharrie Bank effective September 1, 2013.

On April 7, 2004 Uwharrie Mortgage, Inc. was established as a subsidiary of the Company to serve in the capacity of trustee and substitute trustee under deeds of trust.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, Uwharrie, UIA and Uwharrie’s subsidiaries, BOS Agency and Strategic Alliance. All significant intercompany transactions and balances have been eliminated in consolidation.

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.

12

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 1 - Significant Accounting Policies (Continued)

Cash and Cash Equivalents

For the purpose of presentation in the consolidated statements of cash flows, cash and cash equivalents are defined as those amounts included in the balance sheet captions “Cash and due from banks” and “Interest-earning deposits with banks.”

Investment Securities Available for Sale

Investment securities available for sale consist of United States Treasuries, United States Government agencies, Government Sponsored Enterprise (GSE) mortgage backed securities and collateralized mortgage obligations (CMOs), corporate bonds and state and political subdivision bonds. Unrealized holding gains and losses on available for sale securities are reported as a net amount in other comprehensive income, net of income taxes. Gains and losses on the sale of available for sale securities are determined using the specific identification method and recorded on a trade basis. Declines in the fair value of individual available for sale securities below their cost that are other than temporary would result in write-downs of the individual securities, to their fair value. Such write-downs would be included in earnings as realized losses to the extent the losses are associated with the credit quality of the issuer. Amortization of premiums and accretion of discounts are recognized in interest income using the interest method over the period to maturity.

Investment Securities Held to Maturity

Investment securities held to maturity consist of United States Government agencies, corporate bonds and state and political subdivision bonds. The Company has both the intent and ability to hold the securities to maturity. These securities are reported at amortized cost.

Loans Held for Sale

Loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value in the aggregate. Net unrealized losses, if any, are recognized through a valuation allowance by charges to income.

Loans

The Company divides the loans it originates into two segments, commercial and noncommercial loans. Commercial loans are broken down into the following classes: commercial loans, real estate commercial loans and other real estate construction loans. Noncommercial loans are divided into the following classes: real estate 1-4 family construction, real estate 1-4 family residential loans, home equity loans, consumer loans and other loans. The ability of the Company’s borrowers to honor their contracts is largely dependent upon the real estate and general economic conditions in the Company’s market area. Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are reported at their outstanding unpaid principal balances adjusted for charge-offs, the allowance for loan losses, and any deferred fees or costs. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield using the effective interest method. The accrual of interest on mortgage and commercial loans is discontinued at the time the loan is 90 days delinquent unless the credit is well-secured and in process of collection. Credit card loans and other personal loans are typically charged off no later than 180 days past due. In all cases, loans are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful. The exception to this policy is credit card loans that remain in accrual status 90 days or more until they are paid current or charged off.

All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income. The interest on these impaired loans is accounted for on a cash basis until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Generally, a minimum of six months of sustained performance is required.

Allowance for Loan Losses

The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses. The provision for loan losses is expensed to earnings. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

13

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 1 - Significant Accounting Policies (Continued)

The Company has different specific risks identified within the loan segments. Specific risks within the commercial loan segment arise with borrowers that are experiencing diminished operating cash flows, depreciated collateral values or prolonged sales and rental absorption periods. Concentrations within the portfolio, if unmanaged, pose additional risk. Occasionally, the Company will purchase participation loans from other institutions. If these loans are not independently underwritten by the Bank, they could carry additional risk. Generally, owner-occupied commercial real estate loans carry less risk than non-owner occupied. Specific risks within the non-commercial portfolio tend to be tied to economic factors including high unemployment and decreased real estate values. Risk to the Company is greater as home values deteriorate more rapidly than amortization in a loan, leaving little to no equity in properties, especially in junior lien positions. Concentration in the portfolio, such as home equity lines of credit, could pose additional risk if not appropriately managed.

The allowance for loan losses is evaluated both individually and collectively by loan class on a regular basis by management. Loans are collectively evaluated based upon management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. Individually evaluated loans are based upon discounted cash flows or the underlying value of the collateral. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. In addition, regulatory examiners may require the Company to recognize adjustments to the allowance for loan losses based on their judgment about information available to them at the time of their assessment.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for commercial and construction loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent. Homogeneous loans are collectively evaluated by loan class for impairment. However, once a loan is deemed impaired, it will be evaluated individually for specific impairment.

Troubled debt restructure loans (TDRs) are modifications of a loan when a borrower is experiencing financial difficulty and the modification involves providing a concession to the existing loan contract. TDRs are considered to be impaired loans and are individually evaluated for impairment.

The portion of the Company’s allowance for loan loss model related to general reserves captures the mean loss of individual loans within the loan portfolio and adds additional loss based on economic uncertainty and volatility. Specifically, the Company calculates probable losses on loans by computing a probability of loss and multiplying that by a loss given default derived from historical experience, thus deriving the estimated loss scenario by FDIC call report codes. Together, these components, as well as a reserve for qualitative factors based on management’s discretion of economic conditions and portfolio concentrations, form the basis of the allowance model. The loans that are impaired and included in the specific reserve are excluded from these calculations.

Loan Servicing Rights

The Company capitalizes mortgage and Small Business Administration (SBA) loan servicing rights when loans are sold and the loan servicing is retained. The amortization of servicing rights is realized over the estimated period that net servicing revenues are expected to be received. These projections are based on the amount and timing of estimated future cash flows. The amortization of servicing rights is recognized in the statement of income as an offset to other noninterest income. Servicing assets are periodically evaluated for impairment based upon their fair value. Fair value is based upon discounted cash flows using market-based assumptions. Impairment is recognized through a valuation allowance and charged to other expense.

Transfers of Financial Assets

Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

14

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 1 - Significant Accounting Policies (Continued)

Foreclosed Real Estate

Real estate properties acquired through foreclosure or other proceedings are initially recorded at fair value less costs to sell upon foreclosure, establishing a new cost basis. Annually, valuations are performed and the foreclosed property is adjusted to the lower of cost or fair value of the properties, less costs to sell. Any write-down at the time of transfer to foreclosed properties is charged to the allowance for loan losses. Subsequent write-downs are charged to noninterest expense, and costs related to the improvement of the property are capitalized if the fair value less cost to sell will allow it. If not, these costs are expensed also.

Premises and Equipment

Premises and equipment are stated at cost less accumulated depreciation. Land is carried at cost. Additions and major replacements or betterments which extend the useful lives of premises and equipment are capitalized. Maintenance, repairs and minor improvements are expensed as incurred. Depreciation is computed principally by the straight-line method over estimated useful lives, except in the case of leasehold improvements, which are amortized over the term of the leases, if shorter. Useful lives range from five to seven years for furniture, fixtures and equipment, to ten to thirty-nine years for leasehold improvements and buildings, respectively. Upon retirement or other disposition of the assets, the cost and the related accumulated depreciation are removed from the accounts and any gains or losses are reflected in income. ROU assets that are recognized at the initial adoption of a lease arrangement are included in premises and equipment. More information regarding ROU assets can be found in Note 8 (Leases).

Restricted Stock

As a requirement for membership, the Bank invests in the stock of the Federal Home Loan Bank of Atlanta (“FHLB”) and Federal Reserve Bank (“FRB”). These investments are carried at cost. Due to the redemption provisions of these investments, the Company estimated that fair value approximates cost and that this investment was not impaired.

Stock-Based Compensation

The Company recognizes the cost of employee services received in exchange for an award of equity instruments in the financial statements over the period the employee is required to perform the services in exchange for the award (presumptively the vesting period). Accounting Standards Codification (ASC) 718 also requires measurement of the cost of employee services received in exchange for an award based on the grant-date fair value of the award. As of December 31, 2019 and December 31, 2018, there are no outstanding awards.

Income Taxes

The Company and its subsidiaries file a consolidated federal income tax return and separate North Carolina income tax returns. The provision for income taxes in the accompanying consolidated financial statements is provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. We record uncertain tax positions in accordance with ASC 740 on the basis of a two-step process whereby (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold. The tax returns for the Company are subject to audit for the 2016 fiscal year and thereafter. It is the Company’s policy to recognize interest and penalties associated with uncertain tax positions as components of other expenses in the income statement; however, if interest becomes a material amount, it would be reclassified as interest expense. There were no interest or penalties accrued during the years ended December 31, 2019, 2018 and 2017.

Leases

Operating leases in which we are the lessee are recorded as operating lease ROU assets and operating lease liabilities, included in premises and equipment and other liabilities, respectively, on our consolidated balance sheet. We do not currently have any significant finance leases in which we are the lessee. Operating lease ROU assets represent our right to use an underlying asset during the lease term and operating lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and operating

15

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 1 - Significant Accounting Policies (Continued)

lease liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents our incremental collateralized borrowing rate at the lease commencement date. ROU assets are further adjusted for the lease incentives. Operating lease expense, which is comprised of amortization of the ROU asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term, and is recorded in the net occupancy expense in the consolidated statement of income

16

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 1 - Significant Accounting Policies (Continued)

Revenue Recognition

Under ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”, 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 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 recognize 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.

Fair Value of Financial Instruments

ASC 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 does not require any new fair value measurements, but clarifies and standardizes some divergent practices that have emerged since prior guidance was issued. ASC 820 creates a three-level hierarchy under which individual fair value estimates are to be ranked based on the relative reliability of the inputs used in the valuation.

ASC 820 defines fair value as the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, the Company considers the principal or most advantageous market in which those assets or liabilities are sold and considers assumptions that market participants would use when pricing those assets or liabilities. Fair values determined using Level 1 inputs rely on active and observable markets to price identical assets or liabilities. In situations where identical assets and liabilities are not traded in active markets, fair values may be determined based on Level 2 inputs, which exist when observable data exists for similar assets and liabilities. Fair values for assets and liabilities for which identical or similar assets and liabilities are not actively traded in observable markets are based on Level 3 inputs, which are considered to be unobservable.

Among the Company’s assets and liabilities, investment securities available for sale are reported at their fair values on a recurring basis. Certain other assets are adjusted to their fair value on a nonrecurring basis, including other real estate owned, impaired loans, loans held for sale, which are carried at the lower of cost or market; and loan servicing rights, where fair value is determined using similar assets with similar characteristics, when available, or based upon discounted cash flows using market-based assumptions. Deposits, short-term borrowings and long-term obligations are not reported at fair value.

17

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 1 - Significant Accounting Policies (Continued)

Prices for US Treasury securities are readily available in the active markets in which those securities are traded, and the resulting fair values are shown in the “Level 1 input” column. Prices for government agency securities, mortgage-backed securities and for state, county and municipal securities are obtained for similar securities, and the resulting fair values are shown in the “Level 2 input” column. Prices for all other non-marketable investments are determined based on various assumptions that are not observable. The fair values for these investment securities are shown in the “Level 3 input” column. Non-marketable investment securities, which are carried at their purchase price, include those that may only be redeemed by the issuer.

The Company does not record loans at fair value on a recurring basis. However, from time to time, a loan is considered impaired and an allowance for loan losses is established. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as individually impaired, management measures impairment by using one of several methods including collateral value, fair value of similar debt or discounted cash flows. Those impaired loans not requiring an allowance represent loans for which the present value of the expected repayments or fair value of collateral exceed the recorded investments in such loans. The Company typically bases the fair value of the collateral on appraised values which the Company considers Level 3 valuations.

Foreclosed assets are adjusted to fair value upon transfer of the loans to other real estate owned. Real estate acquired in settlement of loans is recorded initially at the estimated fair value of the property less estimated selling costs at the date of foreclosure. The initial recorded value may be subsequently reduced by additional allowances, which are charged to earnings if the estimated fair value of the property less estimated selling costs declines below the initial recorded value. Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the collateral. The Company typically bases the fair value of the collateral on appraised values which the Company considers Level 3 valuations.

Loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value in the aggregate, based on secondary market prices. Net unrealized losses, if any, are recognized through a valuation allowance by charges to income. These loans are recorded in Level 2.

18

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 1 - Significant Accounting Policies (Continued)

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 years ended December 31, 2019, 2018 and 2017:

	Year ended December 31,
	2019			2018			2017
	(dollars in thousands)
Beginning Balance	$	(1,694	)	$	(1,107	)	$	(1,318	)
Accumulated Other comprehensive income (loss) before reclassifications,    net of ($595), $171 and ($185)  tax effect, respectively		1,989			(587	)		356
Amounts reclassified from accumulated other comprehensive    income, net of ($7), $0, and ($4) tax effect,    respectively		28			—			10
Net current-period other comprehensive loss		2,017			(587	)		366
Tax Cuts and Jobs Act of 2017, reclassification from AOCI   to retained earnings, tax effect		—			—			(155	)
Ending Balance	$	323		$	(1,694	)	$	(1,107	)

Earnings per Common Share

The Company had no stock options outstanding at December 31, 2019 or December 31, 2018.

Basic earnings per share (“EPS”) excludes dilution and is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS 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 earnings of the entity. On November 12, 2019, the Company’s Board of Directors declared a 2% stock dividend payable on December 9, 2019 to shareholders of record on November 25, 2019. All information presented in the accompanying consolidated financial statements regarding earnings per share and weighted average number of shares outstanding has been computed giving effect to this stock dividend.

The computation of weighted average shares used in the calculation of basic and dilutive earnings per share is summarized below:

	2019		2018		2017
Weighted average number of common shares used in    computing basic net income per common share		7,199,262		7,229,333		7,427,036
Effect of dilutive stock options		—		—		768
Weighted average number of common shares and dilutive    potential common shares used in computing diluted net    income per common share		7,199,262		7,229,333		7,427,804

19

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 1 - Significant Accounting Policies (Continued)

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.

Recent Accounting Pronouncements

ASU 2016-02, “Leases, Topic 842” was adopted January 1, 2019. 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 previous 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 ROU 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. The impact of the new standard increased assets by $1.9 million and liabilities by $2.0 million, from the year ended December 31, 2018 to the year ended December 31, 2019. We currently have three properties that we operate with a lease term greater than one year.

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 twelve months ended December 31, 2019, gross interchange and card transaction fees totaled $2.0 million while related network costs totaled $1.2 million. On a net basis, we reported $826,000 as interchange and card transaction fees in the accompanying Consolidated Statement of Income for the twelve months ended December 31, 2019. For the twelve months ended December 31, 2018 and December 31, 2017, interchange and card transaction fees were $1.7 million and $1.6 million, respectively, on a gross basis while related network costs were $1.1 million and $913,000, respectively. As a result of the adoption of this standard, balances in prior years were re-classified to reflect the net presentation. In 2018 and 2017, interchange and card transaction fees, net were $648,000 and $656,000, respectively.

20

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 1 - Significant Accounting Policies (Continued)

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. ASU 2016-13 requires an entity to utilize a new impairment model known as the current expected credit loss (“CECL”) model to estimate its lifetime “expected credit loss” and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. The CECL model is expected to result in earlier recognition of credit losses. ASU 2016-13 also requires new disclosures for financial assets measured at amortized cost, loans and available-for-sale debt securities. The updated guidance is effective for interim and annual reporting periods beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. During 2019, the effective date was extended to fiscal years ended on or after December 15, 2022 for public entities that qualify as smaller reporting companies, per the Securities Exchange Commission definition, which currently includes the Company. Entities will apply the standard’s provisions as a cumulative effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. We have entered into a contract to outsource our current model with a CECL-ready vendor. We are currently evaluating the various methods of determining credit losses within the software. The impact of the adoption is dependent on loan portfolio composition and credit quality at adoption date, as well as economic conditions and forecasts at that time.

From time to time the FASB issues exposure drafts of proposed statements of financial accounting standards. Such exposure drafts are subject to comment from the public, to revisions by the FASB and to final issuance by the FASB as statements of financial accounting standards. Management considers the effect of the proposed statements on the consolidated financial statements of the Company and monitors the status of changes to and proposed effective dates of exposure drafts.

Reclassification

Certain amounts in the 2018 and 2017 financial statements have been reclassified to conform to the 2019 presentation. These reclassifications do not have a material impact on net income or shareholders’ equity.

Note 2 - Investment Securities

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

December 31, 2019	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(dollars in thousands)
Securities available for sale
U.S. Treasury	$	4,976	$	36	$	—	$	5,012
U.S. Government agencies		25,869		18		201		25,686
GSE - Mortgage-backed securities and CMO’s		38,305		413		142		38,576
State and political subdivisions		13,937		329		45		14,221
Corporate bonds		5,018		11		—		5,029
Total securities available for sale	$	88,105	$	807	$	388	$	88,524

December 31, 2019	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(dollars in thousands)
Securities held to maturity
U.S. Government agencies	$	578	$	5	$	—	$	583
State and political subdivisions		6,826		62		—		6,888
Corporate bonds		6,024		5		1		6,028
Total securities held to maturity	$	13,428	$	72	$	1	$	13,499

21

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 2 - Investment Securities (Continued)

December 31, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(dollars in thousands)
Securities available for sale
U.S. Treasury	$	4,944	$	11	$	—	$	4,955
U.S. Government agencies		52,935		47		1,066		51,916
GSE - Mortgage-backed securities and CMO’s		17,217		—		515		16,702
State and political subdivisions		13,373		5		423		12,955
Corporate bonds		5,030		6		265		4,771
Total securities available for sale	$	93,499	$	69	$	2,269	$	91,299

December 31, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(dollars in thousands)
Securities held to maturity
U.S. Government agencies	$	855	$	—	$	12	$	843
State and political subdivisions		6,877		6		61		6,822
Corporate bonds		3,105		—		20		3,085
Total securities held to maturity	$	10,837	$	6	$	93	$	10,750

At both December 31, 2019 and December 31, 2018, the Company owned Federal Reserve Bank stock reported at cost of $509,000. Also, at December 31, 2019 and December 31, 2018, the Company owned Federal Home Loan Bank (“FHLB”) stock of $635,000 and $585,000, respectively. The investments in Federal Reserve stock and FHLB stock are required investments related to the Company’s membership in, and borrowings with, these banks and classified as restricted stock on the consolidated balance sheet. These investments are carried at cost since there is no ready market and redemption has historically been made at par value. The Company estimated the fair value approximated cost and that these investments were not impaired at December 31, 2019.

Results from sales of securities available for sale for the years ended December 31, 2019, 2018 and 2017 are as follows:

	2019			2018		2017
	(dollars in thousands)
Gross proceeds from sales	$	3,351		$	—	$	8,918
Realized gains from sales	$	—		$	—	$	—
Realized losses from sales		(35	)		—		(14	)
Net realized gains (losses)	$	(35	)	$	—	$	(14	)

At December 31, 2019 and 2018 securities available for sale with a carrying amount of $65.3 million and $71.5 million, respectively, were pledged as collateral on public deposits and for other purposes as required or permitted by law.

22

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 2 - Investment Securities (Continued)

The following tables show the gross unrealized losses and fair value of investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2019 and December 31, 2018. We believe these unrealized losses on investment securities are a result of a volatile market and fluctuations in market prices due to a rise in interest rates, which will adjust if rates decline. Management does not believe these fluctuations are a reflection of the credit quality of the investments. At December 31, 2019, the unrealized losses on available for sale securities less than twelve months related to three government agency bonds, six government sponsored enterprise (GSE) mortgage backed securities and one state and political subdivision bond. The Company had four government agency bonds and nine GSE mortgage backed securities that had been in a loss position twelve months or more at December 31, 2019. At December 31, 2018, the unrealized losses on held to maturity securities less than twelve months related to one corporate bond. At December 31, 2018, the unrealized loss on available for sale securities less than twelve months related to four government agency bonds, one GSE mortgage backed security and one corporate bond. The Company had sixteen government agency bonds, sixteen GSE mortgage backed securities, one corporate bond and eight state and political subdivision bonds that had been in a loss position for more than twelve months at December 31, 2018. The unrealized losses on held to maturity securities related to two corporate bonds and two state and political subdivision bonds.

December 31, 2019	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(dollars in thousands)
Securities available for sale temporary impairment
U.S. Gov’t agencies		11,956		55		9,704		146		21,660		201
GSE-Mortgage-backed securities and CMO’s		17,613		61		7,431		81		25,044		142
State and political		1,694		45		—		—		1,694		45
Total securities available for sale	$	31,263	$	161	$	17,135	$	227	$	48,398	$	388

December 31, 2019	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(dollars in thousands)
Held to maturity temporary impairment
Corporate bonds		1,502		1		—		—		1,502		1
Total securities held to maturity	$	1,502	$	1	$	—	$	—	$	1,502	$	1

December 31, 2018	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(dollars in thousands)
Securities available for sale temporary impairment
U.S. Gov’t agencies		1,924		29		47,814		1,037		49,738		1,066
GSE-Mortgage-backed securities and CMO’s		526		6		15,602		509		16,128		515
State and political		—		—		11,109		423		11,109		423
Corporate bonds		1,989		224		1,971		41		3,960		265
Total securities available for sale	$	4,439	$	259	$	76,496	$	2,010	$	80,935	$	2,269

23

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 2 - Investment Securities (Continued)

December 31, 2018	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(dollars in thousands)
Held to maturity temporary impairment
U.S. Gov’t agencies	$	—	$	—	$	843	$	12	$	843	$	12
State and political		755		6		5,157		55		5,912		61
Corporate bonds		3,085		20		—		—		3,085		20
Total securities held to maturity	$	3,840	$	26	$	6,000	$	67	$	9,840	$	93

Declines in the fair value of the investment portfolio are believed by management to be temporary in nature. When evaluating an investment for other-than-temporary impairment, management considers, among other things, the length of time and the extent to which the fair value has been in a loss position, the financial condition of the issuer and the intent and the ability of the Company to hold the investment until the loss position is recovered.

Any unrealized losses were largely due to increases in market interest rates over the yields available at the time of purchase. The fair value is expected to recover as the bonds approach their maturity date or market yields for such investments decline. Management does not believe any of the securities are impaired due to reasons of credit quality, but that the losses are temporary in nature. At December 31, 2019, the Company does not intend to sell and is not likely to be required to sell the available for sale securities that were in a loss position prior to full recovery.

The following tables show contractual maturities of the investment portfolio as of December 31, 2019:

	Amortized Cost		Estimated Fair Value
	(dollars in thousands)
Securities available for sale
Due within one year	$	7,784	$	7,827
Due after one but within five years		22,502		22,496
Due after five but within ten years		8,310		8,163
Due after ten years		11,204		11,462
Mortgage backed securities		38,305		38,576
	$	88,105	$	88,524

	Amortized Cost		Estimated Fair Value
	(dollars in thousands)
Securities held to maturity
Due within one year	$	4,525	$	4,530
Due after one but within five years		4,975		5,040
Due after five but within ten years		3,928		3,929
	$	13,428	$	13,499

The mortgage-backed securities are shown separately as they are not due at a single maturity date.

24

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 3 – Loans Held for Investment

The composition of net loans held for investment by class as of December 31, 2019 and 2018 is as follows:

	2019			2018
	(dollars in thousands)
Commercial
Commercial	$	59,075		$	57,176
Real estate - commercial		130,998			130,634
Other real estate construction loans		23,043			31,141
Noncommercial
Real estate 1-4 family construction		7,600			7,805
Real estate - residential		71,370			76,564
Home equity		51,216			52,541
Consumer loans		12,957			12,159
Other loans		1,939			2,110
		358,198			370,130
Less:
Allowance for loan losses		(1,981	)		(2,374	)
Deferred loan fees, net		(248	)		(160	)
Loans held for investment, net	$	355,969		$	367,596

Although the Bank’s loan portfolio is diversified, there is a concentration of mortgage real estate loans, primarily 1 to 4 family residential and construction mortgage loans and home equity loans, which represent 36.34% of total loans. Additionally, there is a concentration in commercial loans secured primarily by real estate, shopping center locations, commercial land development, commercial buildings, equipment, and general commercial loans that represent 59.50% of total loans. There is not a concentration of a particular type of credit in this group of commercial loans.

Total recorded investment in impaired loans, which consisted of nonaccrual loans and other loans identified by management as impaired, totaled $6.8 million and $4.5 million at December 31, 2019 and 2018, respectively. There were no loans 90 days past due and still accruing at December 31, 2019 or at December 31, 2018.

Restructured loans at December 31, 2019 and December 31, 2018 totaled $3.9 million and $3.5 million, respectively, and are included in the impaired loan total. The carrying value of foreclosed properties held as other real estate was $494,000 and $1.0 million at December 31, 2019 and 2018, respectively. The Company had $130,000 in foreclosed residential real estate and $387,000 of residential real estate in process of foreclosure at December 31, 2019.

The Company had loans of $166.9 million and $187.6 million pledged to borrowings at Federal Home Loan Bank and the Federal Reserve Bank at December 31, 2019 and 2018, respectively.

The Company’s loan policies are written to address loan-to-value ratios and collateralization methods with respect to each lending category. Consideration is given to the economic and credit risk of lending areas and customers associated with each category.

Note 4 - Allowance for Loan Losses

During the second quarter of 2019, the Company transitioned its in-house incurred loss allowance for loan loss model to an external

vendor incurred loss model that is CECL-ready. The overall financial impact related to switching models is considered immaterial. As

a result of the change in models, there has been a change in the methodology for establishing the allowance for loan losses, as

described below.

Default in the allowance for loan loss model is now considered 90 days past due, whereas default was defined as a

charge-off event in the previous model. This increases the probabilities of default for the Company, but reduces the loss given default

ratio in the portfolio.

Probabilities of default are now more representative of the Company’s customers. Previously, an analysis was performed with a sample of North Carolina consumers to calculate the probabilities of default by credit score. In the new model, the Company is able to track probabilities of default based on historical information of loans in the portfolio. This is the largest impact of the model transition, resulting in an immaterial recovery of provision for loan losses.

25

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The qualitative factors used in the model include adjustment to historical rates for the impact of the recession in the last business cycle, current volatility in the market, and management’s analysis of local economic factors and industry-specific outlooks.

Changes in the allowance for loan losses for the years ended December 31, 2019, 2018 and 2017 are presented below (the “other” category represents a one-time impact of re-classification for unfunded commitments’ allowance from the allowance for loan losses to an unfunded commitment liability):

Commercial	2019			2018			2017
	(dollars in thousands)
Balance, beginning of year	$	1,334		$	1,401		$	1,404
Provision (recovery) charged to operations		(571	)		132			(72	)
Charge-offs		(11	)		(245	)		(31	)
Recoveries		367			46			100
Net (charge-offs) recoveries		356			(199	)		69
Other		(32	)		—			—
Balance, end of year	$	1,087		$	1,334		$	1,401

26

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 4 - Allowance for Loan Losses (Continued)

Non-Commercial	2019			2018			2017
	(dollars in thousands)
Balance, beginning of year	$	1,040		$	1,057		$	1,303
Provision (recovery) charged to operations		(17	)		(42	)		(164	)
Charge-offs		(149	)		(81	)		(177	)
Recoveries		74			106			95
Net (charge-offs) recoveries		(75	)		25			(82	)
Other		(54	)		—			—
Balance, end of year	$	894		$	1,040		$	1,057

Total	2019			2018			2017
	(dollars in thousands)
Balance, beginning of year	$	2,374		$	2,458		$	2,707
Provision (recovery) charged to operations		(588	)		90			(236	)
Charge-offs		(160	)		(326	)		(208	)
Recoveries		441			152			195
Net (charge-offs) recoveries		281			(174	)		(13	)
Other		(86	)		—			—
Balance, end of year	$	1,981		$	2,374		$	2,458

The following table shows period-end loans and reserve balances by loan segment both individually and collectively evaluated for impairment at December 31, 2019 and 2018:

December 31, 2019	Individually Evaluated				Collectively Evaluated				Total
	Reserve		Loans		Reserve		Loans		Reserve		Loans
	(dollars in thousands)
Commercial	$	32	$	3,660	$	1,055	$	209,456	$	1,087	$	213,116
Non-Commercial		109		3,175		785		141,659		894		144,834
Total	$	141	$	6,835	$	1,840	$	351,115	$	1,981	$	357,950

December 31, 2018	Individually Evaluated				Collectively Evaluated				Total
	Reserve		Loans		Reserve		Loans		Reserve		Loans
	(dollars in thousands)
Commercial	$	42	$	1,359	$	1,292	$	217,592	$	1,334	$	218,951
Non-Commercial		112		3,119		928		147,900		1,040		151,019
Total	$	154	$	4,478	$	2,220	$	365,492	$	2,374	$	369,970

27

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 4 - Allowance for Loan Losses (Continued)

Past due loan information is used by management when assessing the adequacy of the allowance for loan losses. The following tables summarize the past due information of the loan portfolio by class:

December 31, 2019	Loans 30-89 Days Past Due		Loans 90 Days or More Past due and Non - Accrual		Total Past Due Loans		Current Loans		Total Loans		Accruing Loans 90 or More Days Past Due
	(dollars in thousands)
Commercial	$	190	$	—	$	190	$	58,885	$	59,075	$	—
Real estate - commercial		—		2,088		2,088		128,910		130,998		—
Other real estate construction		14		0		14		23,029		23,043		—
Real estate construction		—		—		—		7,600		7,600		—
Real estate - residential		326		752		1,078		70,044		71,122		—
Home equity		57		82		139		51,077		51,216		—
Consumer loan		27		—		27		12,930		12,957		—
Other loans		—		—		—		1,939		1,939		—
Total	$	614	$	2,922	$	3,536	$	354,414	$	357,950	$	—

December 31, 2018	Loans 30-89 Days Past Due		Loans 90 Days or More Past due and Non - Accrual		Total Past Due Loans		Current Loans		Total Loans		Accruing Loans 90 or More Days Past Due
	(dollars in thousands)
Commercial	$	54	$	—	$	54	$	57,122	$	57,176	$	—
Real estate - commercial		—		273		273		130,361		130,634		—
Other real estate construction		—		47		47		31,094		31,141		—
Real estate construction		—		—		—		7,805		7,805		—
Real estate - residential		890		606		1,496		74,908		76,404		—
Home equity		100		118		218		52,323		52,541		—
Consumer loan		86		—		86		12,073		12,159		—
Other loans		—		—		—		2,110		2,110		—
Total	$	1,130	$	1,044	$	2,174	$	367,796	$	369,970	$	—

Once a loan becomes 90 days past due, the loan is automatically transferred to a nonaccrual status. The exception to this policy is credit card loans that remain in accrual status 90 days or more until they are paid current or charged off.

28

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 4 - Allowance for Loan Losses (Continued)

The composition of nonaccrual loans by class as of December 31, 2019 and 2018 is as follows:

	2019		2018
	(dollars in thousands)
Commercial	$	—	$	—
Real estate - commercial		2,088		273
Other real estate construction		—		47
Real estate 1 – 4 family construction		—		—
Real estate – residential		752		606
Home equity		82		118
Consumer loans		—		—
Other loans		—		—
	$	2,922	$	1,044

Loans that are in nonaccrual status or 90 days past due and still accruing are considered to be nonperforming. Nonperforming loans were $2.9 million at December 31, 2019 and $1.0 million at December 31, 2018.

Management uses a risk-grading program to facilitate the evaluation of probable inherent loan losses and to measure the adequacy of the allowance for loan losses. In this program, risk grades are initially assigned by the loan officers and reviewed and monitored by the lenders and credit administration on an ongoing basis. The program has eight risk grades summarized in five categories as follows:

Pass: Loans that are pass grade credits include loans that are fundamentally sound and risk factors are reasonable and acceptable. They generally conform to policy with only minor exceptions and any major exceptions are clearly mitigated by other economic factors.

Watch: Loans that are watch credits include loans on management’s watch list where a risk concern may be anticipated in the near future.

Substandard: Loans that are considered substandard are loans that are inadequately protected by current sound net worth, paying capacity of the obligor or the value of the collateral pledged. All nonaccrual loans are graded as substandard.

Doubtful: Loans that are considered to be doubtful have all weaknesses inherent in loans classified substandard, plus the added characteristic that the weaknesses make the collection or liquidation in full on the basis of current existing facts, conditions and values highly questionable and improbable.

Loss: Loans that are considered to be a loss are considered to be uncollectible and of such little value that their continuance as bankable assets is not warranted.

The tables below summarize risk grades of the loan portfolio by class as of December 31, 2019 and 2018:

December 31, 2019	Pass		Watch		Sub- standard		Doubtful		Total
	(dollars in thousands)
Commercial	$	56,151	$	2,921	$	3	$	—	$	59,075
Real estate - commercial		126,498		1,194		3,306		—		130,998
Other real estate construction		21,253		1,477		313		—		23,043
Real estate 1 - 4 family construction		7,600		—		—		—		7,600
Real estate - residential		67,647		2,464		1,011		—		71,122
Home equity		50,255		879		82		—		51,216
Consumer loans		12,877		79		1		—		12,957
Other loans		1,939		—		—		—		1,939
Total	$	344,220	$	9,014	$	4,716	$	—	$	357,950

29

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 4 - Allowance for Loan Losses (Continued)

December 31, 2018	Pass		Watch		Sub- standard		Doubtful		Total
	(dollars in thousands)
Commercial	$	55,883	$	1,284	$	9	$	—	$	57,176
Real estate - commercial		127,592		1,518		1,524		—		130,634
Other real estate construction		28,711		2,070		360		—		31,141
Real estate 1 - 4 family construction		7,805		—		—		—		7,805
Real estate - residential		69,900		5,470		1,034		—		76,404
Home equity		52,028		395		118		—		52,541
Consumer loans		12,085		73		1		—		12,159
Other loans		2,110		—		—		—		2,110
Total	$	356,114	$	10,810	$	3,046	$	—	$	369,970

The following tables show the breakdown between performing and nonperforming loans by class as of December 31, 2019 and 2018:

December 31, 2019	Performing		Non- Performing		Total
	(dollars in thousands)
Commercial	$	59,075	$	—	$	59,075
Real estate - commercial		128,910		2,088		130,998
Other real estate construction		23,043		—		23,043
Real estate 1 – 4 family construction		7,600		—		7,600
Real estate – residential		70,370		752		71,122
Home equity		51,134		82		51,216
Consumer loans		12,957		—		12,957
Other loans		1,939		—		1,939
Total	$	355,028	$	2,922	$	357,950

December 31, 2018	Performing		Non- Performing		Total
	(dollars in thousands)
Commercial	$	57,176	$	—	$	57,176
Real estate - commercial		130,361		273		130,634
Other real estate construction		31,094		47		31,141
Real estate 1 – 4 family construction		7,805		—		7,805
Real estate – residential		75,798		606		76,404
Home equity		52,423		118		52,541
Consumer loans		12,159		—		12,159
Other loans		2,110		—		2,110
Total	$	368,926	$	1,044	$	369,970

30

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 4 - Allowance for Loan Losses (Continued)

Loans are considered impaired when, based on current information and events it is probable the Company will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement. If a loan is deemed impaired, a valuation analysis is performed and a specific reserve is allocated if necessary. The tables below summarize the loans deemed impaired and the amount of specific reserves allocated by class as of December 31, 2019, 2018, and 2017:

	As of  December 31, 2019								Year Ended December 31, 2019
			Recorded		Recorded
	Unpaid		Investment		Investment				Average
	Principal		With No		With		Related		Recorded		Interest
	Balance		Allowance		Allowance		Allowance		Investment		Income
	(dollars in thousands)
Commercial	$	4	$	—	$	4	$	—	$	6	$	—
Real estate - commercial		3,612		1,923		1,689		29		2,273		145
Other real estate construction		44		—		44		3		64		3
Real estate 1 -4 family construction		—		—		—		—		—		—
Real estate - residential		3,070		987		2,083		99		3,010		159
Home equity		82		13		69		10		116		5
Consumer loans		23		—		23		—		27		2
Total	$	6,835	$	2,923	$	3,912	$	141	$	5,496	$	314

									Year Ended
	As of  December 31, 2018								December 31, 2018
			Recorded		Recorded
	Unpaid		Investment		Investment				Average
	Principal		With No		With		Related		Recorded		Interest
	Balance		Allowance		Allowance		Allowance		Investment		Income
	(dollars in thousands)
Commercial	$	7	$	—	$	7	$	—	$	32	$	—
Real estate - commercial		1,258		93		1,165		38		1,503		51
Other real estate construction		632		47		47		4		132		3
Real estate 1 -4 family construction		—		—		—		—		—		—
Real estate - residential		3,005		901		2,104		110		3,505		145
Home equity		83		51		32		1		54		3
Consumer loans		31		—		31		1		40		3
Total	$	5,016	$	1,092	$	3,386	$	154	$	5,266	$	205

									Year Ended
	As of  December 31, 2017								December 31, 2017
			Recorded		Recorded
	Unpaid		Investment		Investment				Average
	Principal		With No		With		Related		Recorded		Interest
	Balance		Allowance		Allowance		Allowance		Investment		Income
	(dollars in thousands)
Commercial	$	44	$	10	$	34	$	10	$	25	$	2
Real estate - commercial		1,593		1,305		288		9		1,650		72
Other real estate construction		689		101		50		3		208		5
Real estate 1 -4 family construction		—		—		—		—		3		—
Real estate - residential		3,701		1,319		2,382		171		3,762		179
Home equity		35		22		13		1		66		1
Consumer loans		45		45		—		—		53		4
Total	$	6,107	$	2,802	$	2,767	$	194	$	5,767	$	263

31

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 5 – Troubled Debt Restructures

A modification of a loan constitutes a troubled debt restructuring (“TDR”) when a borrower is experiencing financial difficulty and the modification involves providing a concession to the existing loan contract. The Company offers various types of concessions when modifying loans to troubled borrowers, however, forgiveness of principal is rarely granted. Concessions offered are term extensions, capitalizing accrued interest, reducing interest rates to below current market rates or a combination of any of these. Combinations from time to time may include allowing a customer to be placed on interest-only payments. The presentations below in the “other” category are TDRs with a combination of concessions. At the time of a TDR, additional collateral or a guarantor may be requested.

Loans modified as TDRs are typically already on nonaccrual status and in some cases, partial chargeoffs may have already been taken against the outstanding loan balance. The Company classifies TDR loans as impaired loans and evaluates the need for an allowance for loan loss on a loan-by-loan basis. An allowance is based on either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price or the estimated fair value of the underlying collateral less any selling costs, if the loan is deemed to be collateral dependent.

For the twelve months ended December 31, 2019, 2018 and 2017, the following table presents a breakdown of the types of concessions made by loan class:

	Year Ended December 31, 2019
			Pre-Modification		Post-Modification
	Number		Outstanding Recorded		Outstanding Recorded
	of Contracts		Investment		Investment
			(dollars in thousands)
Extend payment terms:
Commercial		—	$	—	$	—
Real estate - commercial		—		—		—
Other real estate construction		—		—		—
Real estate 1 – 4 family construction		—		—		—
Real estate – residential		—		—		—
Home equity		—		—		—
Consumer loans		—		—		—
Other loans		—		—		—
		—	$	—	$	—
Other:
Commercial		1	$	50	$	4
Real estate - commercial		1		1,629		838
Other real estate construction		—		—		—
Real estate 1 – 4 family construction		—		—		—
Real estate – residential		3		261		219
Home equity		—		—		—
Consumer loans		—		—		—
Other loans		—		—		—
		5	$	1,940	$	1,061
Total		5	$	1,940	$	1,061

32

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 5 – Troubled Debt Restructures (Continued)

	Year Ended December 31, 2018
			Pre-Modification		Post-Modification
	Number		Outstanding Recorded		Outstanding Recorded
	of Contracts		Investment		Investment
			(dollars in thousands)
Extend payment terms:
Commercial		—	$	—	$	—
Real estate - commercial		—		—		—
Other real estate construction		—		—		—
Real estate 1 – 4 family construction		—		—		—
Real estate – residential		—		—		—
Home equity		—		—		—
Consumer loans		—		—		—
Other loans		—		—		—
		—	$	—	$	—
Other:
Commercial		—	$	—	$	—
Real estate - commercial		—		—		—
Other real estate construction		—		—		—
Real estate 1 – 4 family construction		—		—		—
Real estate – residential		6		434		387
Home equity		—		—		—
Consumer loans		—		—		—
Other loans		—		—		—
		6	$	434	$	387
Total		6	$	434	$	387

	Year Ended December 31, 2017
			Pre-Modification		Post-Modification
	Number		Outstanding Recorded		Outstanding Recorded
	of Contracts		Investment		Investment
			(dollars in thousands)
Extend payment terms:
Commercial		—	$	—	$	—
Real estate - commercial		—		—		—
Other real estate construction		—		—		—
Real estate 1 – 4 family construction		—		—		—
Real estate – residential		—		—		—
Home equity		—		—		—
Consumer loans		—		—		—
Other loans		—		—		—
		—	$	—	$	—
Other:
Commercial		1	$	12	$	10
Real estate - commercial		2		178		173
Other real estate construction		—		—		—
Real estate 1 – 4 family construction		—		—		—
Real estate – residential		6		708		675
Home equity		—		—		—
Consumer loans		1		9		5
Other loans		—		—		—
		10	$	907	$	863
Total		10	$	907	$	863

33

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 5 – Troubled Debt Restructures (Continued)

During the twelve months ended December 31, 2019, there was one TDR for which there was a payment default. There was one payment default in 2018 and one payment default on a TDR in 2017. The outstanding balance of TDRs at December 31, 2019 is $3.94 million with $3.91 million still accruing compared to an outstanding balance at December 31, 2018 of $3.5 million with $3.4 million still accruing.

A default on a troubled debt restructure is defined as being past due 90 days or being out of compliance with the modification agreement. As previously mentioned, the Company considers TDRs to be impaired loans and has $117,000 in the allowance for loan loss as of December 31, 2019, as a direct result of these TDRs. At December 31, 2018 and 2017 there was $144,000 and $171,000 in the allowance for loan loss related to TDRs, respectively.

The following table presents the successes and failures of the types of modifications within the previous twelve months as of December 31, 2019, 2018 and 2017:

	Paid In Full				Paying as restructured				Converted to nonaccrual				Foreclosure/ Default
	Number of		Recorded		Number of		Recorded		Number of		Recorded		Number of		Recorded
	Loans		Investments		Loans		Investments		Loans		Investments		Loans		Investments
	(dollars in thousands)
December 31, 2019
Extended payment terms		—	$	—		—	$	—		—	$	—		—	$	—
Other		1		37		5		1,940		—		—		—		—
Total		1	$	37		5	$	1,940		—	$	—		—	$	—

	Paid In Full				Paying as restructured				Converted to nonaccrual				Foreclosure/ Default
	Number of		Recorded		Number of		Recorded		Number of		Recorded		Number of		Recorded
	Loans		Investments		Loans		Investments		Loans		Investments		Loans		Investments
	(dollars in thousands)
December 31, 2018
Extended payment terms		—	$	—		—	$	—		—	$	—		—	$	—
Other		8		1,056		6		434		—		—		1		242
Total		8	$	1,056		6	$	434		—	$	—		1	$	242

	Paid In Full				Paying as restructured				Converted to nonaccrual				Foreclosure/ Default
	Number of		Recorded		Number of		Recorded		Number of		Recorded		Number of		Recorded
	Loans		Investments		Loans		Investments		Loans		Investments		Loans		Investments
	(dollars in thousands)
December 31, 2017
Extended payment terms		—	$	—		—	$	—		—	$	—		—	$	—
Other		6		217		10		863		—		—		1		15
Total		6	$	217		10	$	863		—	$	—		1	$	15

Note 6 – Loan Servicing Assets

The principal balance of loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balances of mortgage and other loans serviced for others were approximately $419.4 million and $418.6 million at December 31, 2019 and 2018, respectively. The carrying value of capitalized servicing rights, net of valuation allowances, is included in other assets. A summary of loan servicing rights follows:

	2019			2018			2017
	(dollars in thousands)
Beginning of year servicing rights:	$	1,850		$	2,125		$	2,271
Amounts capitalized		694			388			587
Amortization		(821	)		(663	)		(733	)
Impairment		—			—			—
End of year	$	1,723		$	1,850		$	2,125

34

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 6 – Loan Servicing Assets (Continued)

Amortization expense is estimated as follows:

Year ending December 31,
(dollars in thousands)
2020	$	406
2021		352
2022		298
2023		243
2024		188
Thereafter		236
Total	$	1,723

The amortization does not anticipate or pro-forma loan prepayments.

The fair value of mortgage servicing rights was $3.1 million and $3.5 million at December 31, 2019 and 2018, respectively. The key assumptions used to value mortgage servicing rights were as follows:

	2019			2018
Weighted average remaining life	261 months			259 months
Weighted average discount rate		12	%		12	%
Weighted average coupon		4.04	%		4.02	%
Weighted average prepayment speed		182	%		132	%

Note 7 - Premises and Equipment

The major classes of premises and equipment and the total accumulated depreciation at December 31, 2019 and 2018 are listed below:

	2019		2018
	(dollars in thousands)
Land	$	3,192	$	3,215
Building and improvements		15,783		15,150
ROU assets		1,945		—
Furniture and equipment		8,518		8,808
Total fixed assets		29,438		27,173
Less accumulated depreciation		12,376		12,373
Net fixed assets	$	17,062	$	14,800

Depreciation expense was $1.1 million for the year ended December 31, 2019 compared to $1.1 million and $857,000 for the comparable periods of 2018 and 2017, respectively, and is included in net occupancy expense.

ROU assets are discussed further in Note 8 – Leases.

Note 8 – Leases

Our leases relate to three office locations, two of which are branch locations, with remaining terms of two to ten years. Certain lease arrangements contain extension options which range from five to ten years at the then fair market rental rates. As these extension

35

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

options are not generally considered reasonably certain of exercise, they are not included in the lease term. As of December 31, 2019, operating lease ROU assets were $1.9 million and the lease liability was $2.0 million.  The table below depicts information related to the Company’s leases:

	Twelve Months Ended December 31,
	2019
	(in thousands except percent and period data)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	357
ROU assets obtained in exchange for new operating lease liabilities		1,945
Weighted-average remaining lease term - operating leases, in years		7.6
Weighted-average discount rate - operating leases		2.9%

Total rental expense related to the operating leases was $371,327, $339,782, and $155,757 for the years ended December 31, 2019, 2018 and 2017, respectively, and is included in net occupancy expense. A table detailing the lease expense associated with the aforementioned properties is below.

December 31,
(dollars in thousands)
2020	$	381
2021		347
2022		225
2023		229
2024		233
Thereafter		846
Total lease payments		2,261
Less: Interest		(249	)
Present value of lease liabilities	$	2,012

Lease Commitments Disclosure at December 31, 2018 Prior to Adoption of ASU 2016-02

Operating leases for 2018 and 2017 were accounted for under ASC 840, Leases. Total rental expense related to the operating leases was $339,782 and $155,575 for the years ended December 31, 2018 and 2017, respectively, and is included in net occupancy expense. A table detailing the lease expense associated with the aforementioned properties is below.

December 31,
(dollars in thousands)
2019	$	345
2020		345
2021		306
2022		189
2023		189
Thereafter		812
Total		2,186

36

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 9 - Deposits

The composition of deposits at December 31, 2019 and 2018 is as follows:

	2019					2018
	Amount		Percentage of Total			Amount		Percentage of Total
	(dollars in thousands)
Demand noninterest-bearing	$	150,283		26	%	$	129,714		23	%
Interest checking and money market		263,136		45	%		324,391		57	%
Savings		57,136		10	%		54,784		10	%
Time deposits $250,000 and over		55,682		9	%		7,920		1	%
Other time deposits		59,641		10	%		50,092		9	%
Total	$	585,878		100	%	$	566,901		100	%

The maturities of fixed-rate time deposits at December 31, 2019 are reflected in the table below:

	Time Deposits		Other
Year ending December 31,	$250,000 and Over		Time Deposits
	(dollars in thousands)
2020		53,866		39,650
2021		1,507		15,522
2022		309		2,977
2023		—		610
2024		—		882
Thereafter		—		—
Total	$	55,682	$	59,641

Note 10 - Short-Term Borrowed Funds

The following tables set forth certain information regarding the amounts, year-end weighted average rates, average balances, weighted average rate, and maximum month-end balances for short-term borrowed funds, at and during 2019 and 2018:

	2019					2018
	Amount		Rate			Amount		Rate
	(dollars in thousands)
At year-end
Master notes and other short-term borrowing	$	626		0.89	%	$	1,190		1.49	%
Notes payable		—		—			—		—
Short-term line of credit		—		—			—		—
	$	626		0.89	%	$	1,190		1.49	%

	2019					2018
	Amount		Rate			Amount		Rate
	(dollars in thousands)
Average for the year
Federal funds purchased	$	2		3.04	%	$	2		2.92	%
Master notes and other short-term borrowing		904		1.61	%		1,638		1.00	%
Notes payable		—		—			—		—
Short-term line of credit		—		—			—		—
	$	906		1.62	%	$	1,640		1.00	%

37

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 10 - Short-Term Borrowed Funds (Continued)

	2019		2018
	(dollars in thousands)
Maximum month-end balance
Federal funds purchased		—		—
Master notes and other short-term borrowing		1,486		2,006

Master notes and other secured borrowings represent an overnight investment in commercial paper issued by the Company to customers of its subsidiary bank, where an agreement is in place.

The subsidiary bank has combined available lines of credit for federal funds and Federal Reserve discount window availability in the amount of $47.2 million at December 31, 2019.

Note 11 - Long-Term Debt

The Company has a line of credit with the Federal Home Loan Bank secured by qualifying first lien and second mortgage loans and commercial real estate loans with eligible collateral value of $98.0 million with remaining availability of $56.0 million at December 31, 2019. There were no long-term advances under this line at December 31, 2019 or at December 31, 2018. The subsidiary bank also has standby letters of credit issued by the Federal Home Loan Bank to be used as collateral for public funds deposits. The aggregate amount of the letters of credit was $42.0 million at December 31, 2019.

During the third quarter of 2019, the Company conducted a private placement offering of fixed rate junior subordinated debt securities at $1,000 per security with a required minimum investment of $50,000. The offering raised $10.0 million, of which the entire $10.0 million was outstanding at December 31, 2019. These securities have a final maturity date of September 30, 2029 and may be redeemed by the Company after September 30, 2024. The junior subordinated debt pays interest quarterly at an annual fixed rate of 5.25%. All proceeds of this private placement qualify and are included in the calculation of Tier 2 capital. Once the final maturity drops under five years, the Company must impose a twenty percent annual reduction per year of the amount of the proceeds from the sale of these securities that are eligible to be counted as Tier 2 capital. The Company will have a twenty percent reduction beginning at September 30, 2024.

As of December 31, 2019, the scheduled maturities of these long-term borrowings are as follows:

Year ending December 31,
(dollars in thousands)
2020	$	—
2021		—
2022		—
2023		—
2024		—
Thereafter		9,992
Total	$	9,992

38

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 12 - Income Tax Matters

The significant components of income tax expense for the years ended December 31, 2019, 2018 and 2017 are summarized as follows:

	2019			2018			2017
	(dollars in thousands)
Current tax expense:
Federal	$	662		$	524		$	1,022
State		94			94			96
Total		756			618			1,118
Deferred tax expense:
Federal		26			(47	)		680
State		(11	)		8			11
Total		15			(39	)		691
Net provision for income taxes	$	771		$	579		$	1,809

The difference between the provision for income taxes and the amounts computed by applying the statutory federal income tax rate of 21% to income before income taxes is summarized below:

	2019			2018			2017
	(dollars in thousands)
Tax computed at the statutory federal rate	$	810		$	642		$	1,163
Increases (decrease) resulting from:
Tax exempt interest, net		(133	)		(143	)		(238	)
State income taxes, net of federal benefit		65			80			71
Revalue of deferred tax assets		—			—			812
Other		29			—			1
Provision for income taxes	$	771		$	579		$	1,809

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of deferred taxes at December 31, 2019, 2018 and 2017 are as follows:

	2019			2018			2017
	(dollars in thousands)
Deferred tax assets relating to:
Allowance for loan losses	$	478		$	545		$	569
Deferred compensation		1,078			1,012			936
Other		89			104			173
Lease liability		462			—			—
Net unrealized loss on securities available for sale		—			505			335
Total deferred tax assets		2,107			2,166			2,013
Deferred tax liabilities relating to:
Net unrealized gain on securities available for sale		(96	)		—			—
Premises and equipment		(184	)		(159	)		(213	)
Deferred loans fees and costs		(159	)		(163	)		(148	)
Loan servicing		(92	)		(99	)		(116	)
ROU asset		(447	)		—			—
Total deferred tax liabilities		(978	)		(421	)		(477	)
Net recorded deferred tax asset	$	1,129		$	1,745		$	1,536

The net deferred tax asset is included in other assets on the accompanying consolidated balance sheets.

The Tax Cut and Jobs Act, or the Tax Act, was enacted on December 22, 2017. The SEC issued Staff Accounting Bulletin No. 118 to address uncertainty in applying ASC Topic 740 in the reporting period in which the Tax Act was enacted. The Tax Act included a reduction to the corporate income tax rate from 35 percent to 21 percent effective January 1, 2018. Tax expense was increased in the fourth quarter of 2017 by a provisional $806,000 to reflect the Tax Act changes. This increase includes $155,000 tax expense related to the revaluation of the deferred tax asset for items charged to AOCI. The revaluation of deferred tax assets related to items charged to AOCI was a component of 2017 income tax expense and recognized in continuing operations as required by ASC Topic 740.

39

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 13 - Commitments and Contingencies

Financial Instruments with Off-Balance Sheet Risk

The subsidiary bank is party to financial instruments with off-balance sheet risks in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, lines of credit and standby letters of credit. These instruments involve elements of credit risk in excess of amounts recognized in the accompanying financial statements.

The subsidiary bank’s risk of loss with the unfunded loans and lines of credit or standby letters of credit is represented by the contractual amount of these instruments. The Bank uses the same credit policies in making commitments under such instruments as it does for on-balance sheet instruments. The amount of collateral obtained, if any, is based on management’s credit evaluation of the borrower. Collateral held varies, but may include accounts receivable, inventory, real estate and time deposits with financial institutions. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Credit card commitments are unsecured.

As of December 31, 2019 and 2018, outstanding financial instruments whose contract amounts represent credit risk were as follows:

	2019		2018
	(dollars in thousands)
Commitments to extend credit	$	134,241	$	110,329
Credit card commitments		11,650		10,611
Standby letters of credit		1,213		933
	$	147,104	$	121,873

Contingencies

In the normal course of business, the Company is involved in various legal proceedings. In the opinion of management, any liability resulting from such proceedings would not have a material adverse effect on the consolidated financial statements.

Financial Instruments with Concentration of Credit Risk

The subsidiary bank makes commercial, agricultural, real estate mortgage, home equity and consumer loans primarily in Stanly, Anson, Cabarrus and Mecklenburg counties. A substantial portion of the Company’s customers’ ability to honor their contracts is dependent on the economy in these counties.

Although the Company’s composition of loans is diversified, there is some concentration of mortgage real estate loans, primarily 1-to-4 family residential mortgage loans and in commercial loans secured primarily by real estate, shopping center locations, commercial land development, commercial buildings and equipment in the total portfolio. The Bank’s policy is to abide by real estate loan-to-value margin limits corresponding to guidelines issued by the federal supervisory agencies on March 19, 1993. The Bank’s lending policy for all loans requires that they be supported by sufficient cash flows at the time of origination.

Note 14 - Related Party Transactions

The Company has granted loans to certain directors and executive officers and their related interests. Such loans are made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other borrowers and, in management’s opinion, do not involve more than the normal risk of collectability. All loans to directors and executive officers or their related interests are submitted to the Board of Directors for approval. A summary of loans to directors, executive officers and their related interests follows:

	2019			2018
	(dollars in thousands)
Balance, at beginning of the year	$	9,284		$	8,692
Disbursements during the year		4,833			1,902
Collections during the year		(3,822	)		(1,310	)
Balance, at end of the year	$	10,295		$	9,284

At December 31, 2019, the Company had approved, but unused lines of credit, totaling $1.3 million to executive officers and directors, and their related interests, compared to $3.9 million at December 31, 2018. In addition, at December 31, 2019, the Company had $12.7 million of deposits for executive officers and directors, and their related interest compared to $10.6 million at December 31, 2018. In addition to deposits and loans, certain directors have been issued the subordinated debt of the Company. The amount of related interest in the Company’s subordinated debt in 2019 is $1.1 million compared to $795,000 at December 31, 2018.

During 2017, the Company’s broker-dealer subsidiary (The Strategic Alliance Corp) brokered a private placement offering in the amount of $4.1 million, producing revenue in 2017 of $202,250. Certain officers and directors of the Bank were involved with the transaction as investors in the private placement.

40

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 15 – Shareholders’ Equity and Regulatory Matters

The Company and its banking subsidiary are subject to certain requirements imposed by state and federal banking statutes and regulations. These requirements, among other things, establish minimum levels of capital, restrict the amount of dividends that may be distributed, and require that reserves on deposit liabilities be maintained in the form of vault cash or deposits with the Federal Reserve Bank.

For the reserve maintenance period in effect at December 31, 2019, the subsidiary bank was required to maintain reserve balances in cash or on deposit with the Federal Reserve Bank in the aggregate amount of $4.9 million as reserves on deposit liabilities.

The Company and its subsidiary bank are subject to federal regulatory risk-based capital guidelines for banks and bank holding companies. Each must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices which measure Total Capital, Tier 1 Capital and Common Equity Tier 1 Capital to risk-weighted assets and Tier 1 Capital to average assets.

In 2013, bank regulatory agencies approved regulatory capital guidelines (“Basel III”) aimed at strengthening existing capital requirements for banking organizations. The rules include a common equity Tier 1 capital to risk-weighted assets minimum ratio of 4.50%, a minimum ratio of Tier 1 capital to risk-weighted assets of 6.00%, require a minimum ratio of total capital to risk-weighted assets of 8.00%, and require a minimum Tier 1 leverage ratio of 4.00%. A capital conservation buffer, comprised of common equity Tier 1 capital, was also established above the regulatory minimum capital requirements. This capital conservation buffer will be phased in beginning January 1, 2016 at 0.625% of risk-weighted assets and increase each subsequent year by an additional 0.625% until reaching its final level of 2.50% on January 1, 2019. Strict eligibility criteria for regulatory capital instruments were also implemented under the rules. The rules also revise the definition and calculation of Tier 1 capital, total capital, and risk-weighted assets.

The phase-in period for the rules became effective for the Company and its subsidiary bank on January 1, 2015, with full compliance of all the rules’ requirements phased in over a multi-year schedule, becoming fully phased-in on January 1, 2019. As of December 31, 2019, the Company and its subsidiary bank continue to exceed minimum capital standards and remain well-capitalized under the capital adequacy rules.

Quantitative measures established by regulation to ensure capital adequacy and the Company’s consolidated capital ratios are set forth in the table below. The Company expects to meet or exceed these minimums without altering current operations or strategy.

											Minimum to Be Well
						Minimum					Capitalized Under
						For Capital					Prompt Corrective
	Actual					Requirement					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
December 31, 2019
Total Capital to Risk
Weighted Assets:
Consolidated	$	60,509		14.1	%	$	34,387		8.0	%	$	42,984		10.0	%
Uwharrie Bank		58,082		13.6	%		34,098		8.0	%		42,622		10.0	%
Tier 1 Capital to Risk
Weighted Assets:
Consolidated		48,536		11.3	%		25,790		6.0	%		34,387		8.0	%
Uwharrie Bank		56,101		13.2	%		25,573		6.0	%		34,098		8.0	%
Common Equity Tier 1 Capital to Risk Weighted    Assets:
Consolidated		37,881		8.8	%		19,343		4.5	%		27,940		6.5	%
Uwharrie Bank		45,446		10.7	%		19,180		4.5	%		27,704		6.5	%
Tier 1 Capital to
Average Assets:
Consolidated		48,536		7.4	%		26,336		4.0	%		32,920		5.0	%
Uwharrie Bank		56,101		8.5	%		26,249		4.0	%		32,812		5.0	%

41

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 15 – Shareholders’ Equity and Regulatory Matters (Continued)

											Minimum to Be Well
						Minimum					Capitalized Under
						For Capital					Prompt Corrective
	Actual					Requirement					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
December 31, 2018
Total Capital to Risk
Weighted Assets:
Consolidated	$	58,777		14.0	%	$	33,660		8.0	%	$	42,076		10.0	%
Uwharrie Bank		57,765		13.8	%		33,460		8.0	%		41,826		10.0	%
Tier 1 Capital to Risk
Weighted Assets:
Consolidated		46,869		11.1	%		25,245		6.0	%		33,660		8.0	%
Uwharrie Bank		55,391		13.2	%		25,095		6.0	%		33,460		8.0	%
Common Equity Tier 1 Capital to Risk Weighted    Assets:
Consolidated		36,214		8.6	%		18,934		4.5	%		27,349		6.5	%
Uwharrie Bank		44,736		10.7	%		18,821		4.5	%		27,187		6.5	%
Tier 1 Capital to
Average Assets:
Consolidated		46,869		7.4	%		25,347		4.0	%		31,683		5.0	%
Uwharrie Bank		55,391		8.8	%		25,254		4.0	%		31,567		5.0	%

As of December 31, 2019, the most recent notification from the Federal Deposit Insurance Corporation categorized the Company’s subsidiary bank as being well capitalized under the regulatory framework for prompt corrective action. There have been no conditions or events since such notification that management believes would have changed the categorization.

In January 2013, the Company’s subsidiary bank issued $7.9 million of Fixed Rate Noncumulative Perpetual Preferred Stock, Series B. The preferred stock qualifies as Tier 1 capital at the subsidiary bank and pays dividends at a rate of 5.30%. The offering raised $7.9 million less issuance costs of $113,000.

During 2013, the Company’s subsidiary 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. The offering raised $2.8 million in new capital less total issuance costs of $23,000.

The total net amount of capital raised from Fixed Rate Noncumulative Perpetual Preferred Stock, Series B and Series C issued at the subsidiary bank level is presented as noncontrolling interest in the consolidated balance sheets.

During the third quarter of 2019, the Company conducted a private placement offering of fixed rate junior subordinated debt securities at $1,000 per security with a required minimum investment of $50,000. The offering raised $10.0 million, of which the entire $10.0 million was outstanding at December 31, 2019. These securities have a final maturity date of September 30, 2029 and may be redeemed by the Company after September 30, 2024. The junior subordinated debt pays interest quarterly at an annual fixed rate of 5.25%. All proceeds of this private placement qualify and are included in the calculation of Tier 2 capital. Once the final maturity drops under five years, the Company must impose a twenty percent annual reduction per year of the amount of the proceeds from the sale of these securities that are eligible to be counted as Tier 2 capital. The Company will have a twenty percent reduction beginning at September 30, 2024.

All of the Company’s aforementioned investment in its subsidiary bank qualifies for Tier 1 capital treatment for the bank and is included as such in its year end capital ratios.

42

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 15 – Shareholders’ Equity and Regulatory Matters (Continued)

Stock Repurchase Program

On February 21, 1995, the Company’s Board of Directors authorized and approved a Stock Repurchase Program, to be reaffirmed annually, pursuant to which the Company may repurchase shares of the Company’s common stock for the primary purpose of providing liquidity to its shareholders. During 2019, the Company repurchased 168,683 shares of outstanding common stock and repurchased 138,629 and 75,709 shares of outstanding common stock during 2018 and 2017, respectively.

43

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 16 - Stock Based Compensation

During 2006, the Company adopted the 2006 Incentive Stock Option Plan (“SOP II”) and the Employee Stock Purchase Plan (“SPP II”), under which options to purchase shares of the Company’s common stock may be granted to officers and eligible employees. Options granted under the SOP II are exercisable in established increments according to vesting schedules, generally three to five years, and will expire if not exercised within ten years of the date of grant. Options granted under the SPP II are fully vested at the date of grant and expire if not exercised within two years of the grant date. At December 31, 2019, both the SOP II plan and the SPP II plan had expired with no options outstanding.

As of December 31, 2019, there was no unrecognized compensation cost related to non-vested share-based compensation arrangements granted under all of the Company’s stock benefit plans.

There were 13,378 options exercised in 2018 at a weighted average exercise price of $4.93. There were no options exercised in 2019 or 2017.

Note 17 - Employee and Director Benefit Plans

Employees’ 401(k) Retirement Plan

The Company has established an associate tax deferred savings plan under Section 401(k) of the Internal Revenue Code of 1986. All associates are eligible to make elective deferrals on the first day of the calendar month coincident or next following the date the associate attains the age of 18 and completes thirty days of eligibility service. Employees are 100% vested in the plan once they enroll.

The Company’s annual contribution to the plan was $446,228 in 2019, $428,162 in 2018 and $361,936 in 2017, determined as follows:

• The Company will contribute a safe harbor matching contribution in an amount equal to: (i) 100% of the matched employee contributions that are not in excess of 3% of compensation, plus (ii) 50% of the amount of the matched employee contributions that exceed 3% of compensation, but do not exceed 5% of compensation.

• A discretionary contribution, subject to approval by the Board of Directors, limited to an amount not to exceed the maximum amount deductible for income tax purposes.

44

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 17 - Employee and Director Benefit Plans (Continued)

Supplemental Executive Retirement Plan

The Company has implemented a non-qualifying deferred compensation plan for certain executive officers. Certain of the plan benefits will accrue and vest during the period of employment and will be paid in fixed monthly benefit payments for up to ten years upon separation from service. The plan also provides for payment of death benefits and for payment of disability benefits in the event the officer becomes permanently disabled prior to separation from service.

Effective December 31, 2008, this plan was amended and restated to comply with Section 409A of the Internal Revenue Code. The participants’ account liability balances as of December 31, 2008 could be transferred into a trust fund, where investments will be participant-directed.

The plan is structured as a defined contribution plan and the Company’s expected annual funding contribution for the participants has been calculated through the participant’s expected retirement date. Under terms of the agreement, the Company has reserved the absolute right, at its sole discretion, to either fund or refrain from funding the plan. The plan also provides for payment of death benefits and for payment of disability benefits in the event the officer becomes permanently disabled prior to separation from service. The plans assets are maintained in a rabbi trust and are recorded at fair value with the corresponding liability adjusted to the same fair value.

During each year of 2019, 2018 and 2017, $336,800 was expensed for benefits provided under the plans. The liability accrued for deferred compensation under the plan amounted to $4.7 million and $4.4 million at December 31, 2019 and 2018, respectively.

45

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 17 - Employee and Director Benefit Plans (Continued)

Split-Dollar Life Insurance

The Company has entered into Life Insurance Endorsement Method Split-Dollar Agreements with certain officers. Under these agreements, upon death of the officer, the Company first recovers the cash surrender value of the contract and then shares the remaining death benefits from insurance contracts, which are written with different carriers, with the designated beneficiaries of the officers. The death benefit to the officers’ beneficiaries is a multiple of base salary at the time of the agreements. The Company, as owner of the policies, retains an interest in the life insurance proceeds and a 100% interest in the cash surrender value of the policies. During 2019, 2018, and 2017, the expense associated with these policies was $13,107, $1,846, and $10,533 respectively.

The liability associated with the split-dollar life insurance policies is $786,000 and $773,000 at December 31, 2019 and 2018, respectively.

Stock Grant Plan

During 2015, the Company adopted the 2015 Stock Grant Plan (“SGP”), under which the Company, at its discretion, may choose to make grants or awards of Uwharrie Capital Corp common stock (the “Common Stock”) to employees, directors or independent contractors of the Company or its subsidiaries as an alternate form of compensation or as a performance bonus. Shares of Common Stock to be used for Stock Grants under this Plan will be outstanding shares purchased by a revocable trust formed by the Company (the “Trust”). Participants will be 100% vested in the shares purchased on their behalf as soon as the Trust’s purchase is completed. The Company recognizes expense for the value of the shares at the time they are purchased by the Trust. During 2019 there were 14,400 shares granted at an expense of $72,000 compared to 8,926 shares granted at an expense of $50,000 in 2018 and 8,734 shares granted at an expense of $50,000 in 2017.

Note 18 - Fair Values of Financial Instruments and Interest Rate Risk

ASC 825, “Disclosures about Fair Value of Financial Instruments,” requires disclosure of the fair value of financial assets and financial liabilities, including those that are not measured and reported at fair value on a recurring basis or non-recurring basis.

The fair value estimates presented at December 31, 2019 and December 31, 2018, are based on relevant market information and information about the financial instruments. Fair value estimates are intended to represent the price an asset could be sold at or the price a liability could be settled for. However, given there is no active market or observable market transactions for many of the Company’s financial instruments, the Company has made estimates of many of these fair values which are subjective in nature, involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimated values. The estimated fair values disclosed in the following table do not represent market values of all assets and liabilities of the Company and should not be interpreted to represent the underlying value of the Company. The following table reflects a comparison of carrying amounts and the estimated fair value of the financial instruments as of December 31, 2019 and December 31, 2018:

	Carrying		Estimated
December 31, 2019	Value		Fair Value		Level 1		Level 2		Level 3
	(dollars in thousands)
FINANCIAL ASSETS
Cash and cash equivalents	$	155,198	$	117,938	$	115,693	$	2,245	$	—
Securities available for sale		88,524		88,524		5,012		83,512		—
Securities held to maturity		13,428		13,499		—		10,499		3,000
Loans held for investment, net		355,969		354,269		—		—		354,269
Loans held for sale		2,946		2,946		—		2,946		—
Restricted stock		1,144		1,144		1,144		—		—
Loan servicing rights		1,723		3,228		—		3,228		—
Accrued interest receivable		1,666		1,666		—		—		1,666
FINANCIAL LIABILITIES
Deposits	$	585,878		567,130	$	—	$	567,130	$	—
Short-term borrowings		626		626		—		626		—
Long-term debt		9,992		10,180		—		—		10,180
Accrued interest payable		55		55		—		—		55

46

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 18 - Fair Values of Financial Instruments and Interest Rate Risk (Continued)

	Carrying		Estimated
December 31, 2018	Value		Fair Value		Level 1		Level 2		Level 3
	(dollars in thousands)
FINANCIAL ASSETS
Cash and cash equivalents	$	117,934	$	117,901	$	115,693	$	2,208	$	—
Securities available for sale		91,299		91,299		4,955		86,344		—
Securities held to maturity		10,837		10,750		—		10,750		—
Loans held for investment, net		367,596		364,636		—		—		364,636
Loans held for sale		4,800		4,800		—		4,800		—
Restricted stock		1,094		1,094		1,094		—		—
Mortgage servicing rights		1,850		3,455		—		3,455		—
Accrued interest receivable		1,763		1,763		—		—		1,763
FINANCIAL LIABILITIES
Deposits	$	566,901	$	521,508	$	—	$	521,508	$	—
Short-term borrowings		1,190		1,190		—		1,190		—
Long-term debt		9,974		10,086		—		—		10,086
Accrued interest payable		16		16		—		—		16

At December 31, 2019, the subsidiary bank had outstanding standby letters of credit and commitments to extend credit. These off-balance sheet financial instruments are generally exercisable at the market rate prevailing at the date the underlying transaction will be completed. The fair value is not material. See Note 13.

47

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 18 - Fair Values of Financial Instruments and Interest Rate Risk (Continued)

The following table provides fair value information for assets and liabilities measured at fair value on a recurring basis as of December 31, 2019 and 2018:

	December 31, 2019
	(dollars in thousands)
	Total		Level 1		Level 2		Level 3
Securities available for sale:
US Treasury	$	5,012	$	5,012	$	—	$	—
US Government		25,686		—		25,686		—
Mortgage-backed securities and CMO’s		38,576		—		38,576		—
State and political subdivisions		14,221		—		14,221		—
Corporate bonds		5,029		—		5,029		—
Total assets at fair value	$	88,524	$	5,012	$	83,512	$	—
Total liabilities at fair value	$	—	$	—	$	—	$	—

	December 31, 2018
	(dollars in thousands)
	Total		Level 1		Level 2		Level 3
Securities available for sale:
US Treasury	$	4,955	$	4,955	$	—	$	—
US Government		51,916		—		51,916		—
Mortgage-backed securities and CMO’s		16,702		—		16,702		—
State and political subdivisions		12,955		—		12,955		—
Corporate bonds		4,771		—		4,771		—
Total assets at fair value	$	91,299	$	4,955	$	86,344	$	—
Total liabilities at fair value	$	—	$	—	$	—	$	—

The Company may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis in accordance with U.S. generally accepted accounting principles. These include assets that are measured at the lower of cost or market that were recognized at fair value below cost at the end of the period. Assets re-measured at fair value during the period are included in the table below as of December 31, 2019 and December 31, 2018:

	December 31, 2019
	(dollars in thousands)
	Total		Level 1		Level 2		Level 3
Impaired loans	$	3,771	$	—	$	—	$	3,771
Other real estate owned		364		—		—		364
Total assets at fair value	$	4,135	$	—	$	—	$	4,135
Total liabilities at fair value	$	—	$	—	$	—	$	—

	December 31, 2018
	(dollars in thousands)
	Total		Level 1		Level 2		Level 3
Impaired loans	$	3,279	$	—	$	—	$	3,279
Other real estate owned		951		—		—		951
Total assets at fair value	$	4,230	$	—	$	—	$	4,230
Total liabilities at fair value	$	—	$	—	$	—	$	—

Quantitative Information about Level 3 Fair Value Measurements

48

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 18 - Fair Values of Financial Instruments and Interest Rate Risk (Continued)

			General
December 31, 2019	Valuation Technique	Unobservable Input	Range
Nonrecurring measurements:
Impaired loans	Discounted appraisals	Collateral discounts and Estimated costs to sell	0 – 25%
	Discounted cash flows	Discount rates	4%-8.75%
OREO	Discounted appraisals	Collateral discounts and Estimated costs to sell	0 – 10%

			General
December 31, 2018	Valuation Technique	Unobservable Input	Range
Nonrecurring measurements:
Impaired loans	Discounted appraisals	Collateral discounts and Estimated costs to sell	0 – 25%
	Discounted cash flows	Discount rates	4%-8.75%
OREO	Discounted appraisals	Collateral discounts and Estimated costs to sell	0 – 10%

At December 31, 2019 and 2018, impaired loans were being evaluated with discounted expected cash flows for performing TDRs and discounted appraisals were being used on collateral dependent loans.

Note 19 - Parent Company Financial Data

The following is a summary of the condensed financial statements of Uwharrie Capital Corp:

Condensed Balance Sheets

	December 31,
	2019		2018
	(dollars in thousands)
Assets
Cash and demand deposits	$	526	$	287
Interest-earning deposits		1,589		1,256
Investments in:
Bank subsidiaries		45,770		43,042
Nonbank subsidiaries		381		450
Other assets		2,073		1,638
Total assets	$	50,339	$	46,673
Liabilities and shareholders’ equity
Master notes	$	626	$	1,190
Short term debt		—		—
Long term debt		9,992		9,974
Other liabilities		1,518		989
Total liabilities		12,136		12,153
Shareholders’ equity		38,203		34,520
Total liabilities and shareholders’ equity	$	50,339	$	46,673

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UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 19 - Parent Company Financial Data (Continued)

Condensed Statements of Income

	2019			2018			2017
	(dollars in thousands)
Equity in undistributed earnings (loss) of subsidiaries	$	1,206		$	2,026		$	745
Dividends received from subsidiaries		2,750			1,150			1,500
Interest income		15			17			6
Other income		41			80			93
Interest expense		(577	)		(571	)		(564	)
Other operating expense		(578	)		(410	)		(436	)
Income tax benefit		230			185			267
Net income	$	3,087		$	2,477		$	1,611
Consolidated net income	$	3,087		$	2,477		$	1,611
Less: Net income attributable to noncontrolling interest		(564	)		(570	)		(592	)
Net income attributable to Uwharrie Capital Corp		2,523			1,907			1,019
Net income available to common shareholders	$	2,523		$	1,907		$	1,019
Net income per common share
Basic	$	0.36		$	0.26		$	0.14
Diluted	$	0.36		$	0.26		$	0.14
Weighted average shares outstanding
Basic		7,066,880			7,229,333			7,427,036
Diluted		7,066,880			7,229,333			7,427,804

Condensed Statements of Cash Flows

	2019			2018			2017
	(dollars in thousands)
Cash flows from operating activities
Net income	$	3,087		$	2,477		$	1,611
Adjustments to reconcile net income to net cash provided by operating    activities:
Equity in undistributed (earnings) loss of subsidiaries		(1,206	)		(2,026	)		(745	)
Increase in other assets		(435	)		(198	)		(124	)
Increase in other liabilities		528			220			267
Net cash provided by operating activities		1,974			473			1,009
Cash flows from financing activities
Decrease in master notes		(564	)		(562	)		(410	)
Decrease in short-term debt		—			—			(500	)
Increase (decrease) in long-term debt		(440	)		440			—
Net increase in subordinated debentures		458			—			—
Net increase in investment in subsidiaries		—			(250	)		—
Net proceeds from issuance of common stock - stock options		—			65			—
Repurchase of common stock, net		(850	)		(747	)		(391	)
Cash paid for fractional shares		(7	)		(7	)		(7	)
Other, net		1			—			—
Net cash used by financing activities		(1,402	)		(1,061	)		(1,308	)
Net decrease in cash and cash equivalents		572			(588	)		(299	)
Cash and cash equivalents at beginning of year		1,543			2,131			2,430
Cash and cash equivalents at end of year	$	2,115		$	1,543		$	2,131

50

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Selected Financial Data

Selected Financial Data

(dollars in thousands except ratios, per share and shares outstanding information)

	2019			2018			2017			2016			2015
Summary of Operations
Interest income	$	23,767		$	21,873		$	19,340		$	18,046		$	17,847
Interest expense		3,565			1,882			1,277			1,310			1,733
Net interest income		20,202			19,991			18,063			16,736			16,114
Provision for (recovery of) loan losses		(588	)		90			(236	)		(88	)		(620	)
Noninterest income		9,005			8,279			8,425			9,357			7,712
Noninterest expense		25,937			25,124			23,304			23,075			21,633
Income taxes		771			579			1,809			895			806
Net income	$	3,087		$	2,477		$	1,611		$	2,211		$	2,007
Less: Net income attributable to noncontrolling interest		(564	)		(570	)		(592	)		(593	)		(592	)
Less: Dividends on preferred stock	$	—		$	—		$	—		$	—		$	—
Net Income (loss) available to common shareholders	$	2,523		$	1,907		$	1,019		$	1,618		$	1,415
Per Common Share
Net income – basic (1)	$	0.35		$	0.26		$	0.14		$	0.21		$	0.19
Net income (loss) – diluted (1)		0.35			0.26			0.14			0.21			0.19
Book value (1)		5.38			4.75			4.58			4.40			4.33
Weighted Average Shares
Outstanding:
Basic (1)		7,199,262			7,229,333			7,427,036			7,531,360			7,634,024
Diluted (1)		7,199,262			7,229,333			7,427,804			7,531,470			7,634,024
Ratios
Return on average assets		0.48	%		0.40	%		0.28	%		0.41	%		0.38	%
Return on average equity		6.43	%		5.57	%		3.62	%		4.99	%		4.65	%
Average equity to average assets		7.43	%		7.26	%		7.78	%		8.29	%		8.27	%
Selected Year-end Balances
Assets	$	656,793		$	632,304		$	577,253		$	548,230		$	532,202
Loans held for investment		357,950			369,970			356,871			341,829			320,132
Securities		101,952			102,136			107,201			117,889			100,500
Deposits		585,878			566,901			512,628			485,719			467,733
Borrowed funds		10,618			11,164			11,286			12,208			15,305
Shareholders’ equity		48,858			45,175			44,540			43,525			43,314
Selected Average Balances
Assets	$	645,681		$	612,403		$	572,630		$	534,296		$	521,699
Loans held for investment		369,540			369,419			348,980			334,317			316,485
Securities		100,775			103,223			113,025			107,396			112,348
Deposits		575,480			548,296			509,352			470,921			458,655
Borrowed funds		10,956			11,284			11,679			12,898			14,432
Shareholders’ equity		47,993			44,468			44,542			44,283			43,123

(1) Net income per share, book value per share, weighted average shares outstanding and shares outstanding at year-end for years 2018 through 2015 have been adjusted to reflect the 2% stock dividends in 2019, 2018, 2017 and 2016.

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UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

A discussion and analysis of the Company’s operating results and financial condition are presented in the following narrative and financial tables. The comments are intended to supplement and should be reviewed in conjunction with the consolidated financial statements and notes thereto appearing on pages 30-74 of this Annual Report. References to changes in assets and liabilities represent end-of-period balances unless otherwise noted. Statements contained in this Annual Report, which are not historical facts, are forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995. Amounts herein could vary because of market and other factors. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, factors discussed in documents filed by the Company with the Securities and Exchange Commission periodically. Such forward-looking statements may be identified by the use of such words as “believe,” “expect,” “anticipate,” “should,” “might,” “planned,” “estimated,” “potential”, and similar words. Examples of forward-looking statements include, but are not limited to, estimates with respect to the financial condition, expected or anticipated revenue, results of operations and business of the Company that are subject to various factors, which could cause actual results to differ materially from these estimates. These factors include, but are not limited to, general economic conditions, changes in interest rates, deposit flows, loan demand, real estate values, and competition; changes in accounting principles, policies, or guidelines; changes in legislation or regulation; and other economic, competitive, governmental, regulatory, and technological factors affecting the Company’s operations, pricing, products and services.

Financial Condition at December 31, 2019 and December 31, 2018

The Company’s total assets increased $24.5 million from $632.3 million at December 31, 2018 to $656.8 million at December 31, 2019. The primary driver of this increase was a $34.2 million increase in interest-earning deposits with banks. The increase was offset by a decrease in loans held for investment of $12.0 million related to large, unexpected pay downs during the year.

Cash and cash equivalents increased $37.3 million during the year ended December 31, 2019 as a result of an increase in customer deposits held by the bank and loan pay downs.

Investment securities consist of securities available for sale and securities held to maturity. Total investment securities decreased $184,000 or 0.18%, from $102.1million at December 31, 2018 to $102.0 million at December 31, 2019. During the year, the Company purchased $25.5 million in various securities to replenish the maturities in the portfolio. The Company also experienced an increase in the market value of the available for sale portfolio of $2.6 million due to external market rate changes. The pre-tax unrealized loss position of $2.2 million as of December 31, 2018 is now a $419,000 pre-tax unrealized gain position at December 31, 2019.

Loans held for investment decreased $12.0 million from $370.0 million at December 31, 2018 to $358.0 million at December 31, 2019. The decline in the portfolio was spread across several loan portfolio classes with commercial real estate construction experiencing the largest decline of $8.1 million or 26.00% and residential real estate experiencing a decline of $5.2 million or 6.78%. The decline was offset by increases in the commercial real estate loans, commercial loans, home equity lines and the consumer loan class, with commercial seeing the greatest increase of $1.9 million or 3.32%. Loans held for sale decreased by 38.63% or $1.9 million compared to the prior year. The allowance for loan loss was $2.0 million at December 31, 2019, which represents 0.55% of the loan portfolio, a decrease from 0.65% at December 31, 2018. The credit quality of consumer and commercial relationships continues to improve, which lowers the probability of default used to calculate the allowance for loan loss estimate, thus decreasing the allowance for loan loss as a percentage of the loan portfolio. Net recoveries were $281,000 at December 31, 2019 compared to net charge offs of $174,000 at December 31, 2018.

Other changes in our consolidated assets are related to premises and equipment, other real estate owned and other assets. During 2019, the Company adopted ASU 2016-02, “Leases, Topic 842”, which resulted in the recognition of a ROU asset, which is recorded in the premises and equipment subtotal (see Note 1). The value of this asset is $1.9 million at December 31, 2019, which is the largest driver in the $2.3 million increase in premises and equipment from $14.8 million at December 31, 2018 to $17.1 million at December 31, 2019. Throughout 2019, other real estate owned declined $553,000, from $1.0 million at December 31, 2018 to $494,000 at December 31, 2019. During 2019, the Company sold six pieces of foreclosed property totaling $598,000 realizing a loss of $40,000. The Company also had changes in reserves totaling $20,000 on the remaining property. However, the Company foreclosed on three loan relationships totaling $267,000, which were added to other real estate owned in 2019. Other assets decreased by $1.0 million from $11.9 million at December 31, 2018 to $10.9 million at December 31, 2019, driven by a decrease in the value of the deferred tax assets of $602,000 associated with the large increase in value of our available for sale securities.

52

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

Customer deposits continued to be our principal funding source in 2019. At December 31, 2019, deposits from our customers totaled $585.9 million, an increase of $19.0 million from $566.9 million at December 31, 2018. During 2019, demand noninterest bearing checking increased $20.6 million, while total time deposits and savings deposits increased $57.3 million and $2.4 million, respectively. These increases were offset by a decrease in interest checking and money market accounts of $61.3 million. During early 2019, as rates continued to increase from 2018, many customers moved into longer-term, maturity time-deposits before rates began to fall in mid-2019.

During 2019 the Company’s net borrowings decreased by $546,000. Borrowings consist of both short-term and long-term borrowed funds. The Company utilizes both short-term and long-term advances from the Federal Home Loan Bank. At December 31, 2019 and 2018, there were no advances outstanding. The components of total borrowings include $10.0 million in junior subordinated long-term debt and $626,000 in master notes at December 31, 2019. During the third quarter of 2019, the Company conducted a private placement offering of fixed rate junior subordinated debt securities at $1,000 per security with a required minimum investment of $50,000. This offering replaced the Company’s $9.5 million of fixed rate junior subordinated debt that was issued in 2014 at a rate of 5.75%. The refinance allowed the Company to maintain 100% of the debt to be classified as Tier 2 capital, reduce interest expense by $25,000, and provide additional operating cash for the holding company. The 2019 offering raised $10.0 million, of which the entire $10.0 million was outstanding at December 31, 2019. These securities have a final maturity date of September 30, 2029 and may be redeemed by the Company after September 30, 2024. The junior subordinated debt pays interest quarterly at an annual fixed rate of 5.25%. All proceeds of this private placement qualify and are included in the calculation of Tier 2 capital. Once the final maturity drops under five years, the Company must impose a twenty percent annual reduction per year of the amount of the proceeds from the sale of these securities that are eligible to be counted as Tier 2 capital. The Company will have a twenty percent reduction beginning at September 30, 2024.

Other liabilities increased from $9.0 million at December 31, 2018 to $11.4 million at December 31, 2019, an increase of $2.3 million driven by the adoption of ASU 2016-02, “Leases, Topic 842”, which resulted in the recognition of a lease liability that is recorded in the other liabilities subtotal (see Note 1). The value of this liability is $2.0 million at December 31, 2019, which is the largest driver in the $2.3 million increase in other liabilities.

At December 31, 2019, total shareholders’ equity was $48.9 million, an increase of $3.7 million from December 31, 2018. Net income for the period was $3.1 million. Unrealized gains on investment securities net of tax increased $2.0 million. The Company repurchased 168,683 outstanding shares of common stock at an aggregate repurchase price of $850,000. The Company also paid $564,000 in dividends attributed to noncontrolling interest. At December 31, 2019, the Company and its subsidiary bank exceeded all applicable regulatory capital requirements.

Results of Operations for the Years Ended December 31, 2019 and 2018

Earnings

Uwharrie Capital Corp reported net income of $3.1 million for the twelve months ended December 31, 2019, as compared to $2.5 million for the twelve months ended December 31, 2018, an increase of $610,000. Net income available to common shareholders was $2.5 million or $0.36 per common share for the year ended December 31, 2019, compared to net income available to common shareholders of $1.9 million or $0.26 per common share for the year ended December 31, 2018. Net income available to common shareholders is net income less any dividends paid on the aforementioned noncontrolling interest.

Net Interest Income

As with most financial institutions, the primary component of earnings for our subsidiary bank is net interest income. Net interest income is the difference between interest income, principally from the loan and investment securities portfolios, and interest expense, principally on customer deposits and wholesale borrowings. Changes in net interest income result from changes in volume, spread and margin. For this purpose, volume refers to the average dollar level of interest-earning assets and interest-bearing liabilities, spread refers to the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities, and margin refers to net interest income divided by average interest-earning assets. Margin is influenced by the level and relative mix of interest-earning assets and interest-bearing liabilities, as well as levels of noninterest bearing liabilities and capital.

Net interest income increased $211,000 to a total of $20.2. million for the twelve months ended December 31, 2019 from the $19.9 million earned in the same period of 2018. During 2019, growth in the volume of interest-earning assets outpaced the growth in interest-bearing liabilities by $375,000. The average yield on our interest-earning assets increased 11 basis points to 3.96%, while the

53

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

average rate paid for interest-bearing liabilities increased 37 basis points. These increases resulted in a net decrease of 26 basis points in our interest rate spread, from 3.41% in 2018 to 3.15% in 2019. Our net interest margin for 2019 was 3.37%, compared to 3.53% in 2018. As a part of the loan agreements, a portion of the Company’s loan portfolio has interest rate floors and caps. The interest rate floor feature allows the Company to maintain a more a favorable interest margin despite a decline in rates; however, the interest rate cap could hurt the margin in a rising rate environment. Financial Table 1 presents a detailed analysis of the components of the Company’s net interest income, while Financial Table 2 summarizes the effects on net interest income from changes in interest rates and in the dollar volume of the components of interest-earning assets and interest-bearing liabilities.

Provision for Loan Losses

The provision for (recovery of) loan losses was ($588,000) and $90,000 for the twelve months ended December 31, 2019 and 2018, respectively. There were net loan recoveries of $281,000 for the twelve months ended December 31, 2019 as compared to net loan charge-offs of $174,000 during the same period of 2018. The reduction in provision was directly related to large, unexpected loan pay offs, as well as one large loan recovery. Please refer to the “Asset Quality” discussion below for further information.

Noninterest Income

The Company generates most of its revenue from net interest income; however, diversification of our earnings base is a key strategic initiative to our long-term success. Noninterest income increased 8.8%, from $8.3 million in 2018, to $9.0 million in 2019, an increase of $726,000. A driving factor contributing to this increase was the increase in income from mortgage loan sales of $855,000 to $3.8 million for 2019 compared to $3.0 million during 2018. Total production for the mortgage division increased by $24.0 million from December 31, 2018 to December 31, 2019, as additional originators were added to our Mecklenburg County market.

Noninterest Expense

Noninterest expense for the year ended December 31, 2019 was $25.9 million compared to $25.1 million for 2018, an increase of $813,000. Salaries and employee benefits, the largest component of noninterest expense, increased $942,000, from $16.2 million for the period ending December 31, 2018 to $17.1 million for 2019. Several factors contributed to this increase, including but not limited to, the full-year impact of our Rea Road branch as we expand into new markets, increased regulation requiring compliance-focused positions, and increased market/sales demand requiring additional commissions for mortgage lending. Foreclosed real estate expense, another major component of the change in noninterest expense, increased $255,000, from $45,000 in 2018 to $300,000 during 2019. The primary factor relating to this increase was the large write down of a property that had been held in other real estate owned since 2006. Professional fees decreased $129,000 for the period ending December 31, 2019 to $929,000 compared to $1.1 million for the same period in 2018 primarily related to the core system conversion that took place in August of 2018. In 2018, the Company incurred one-time training and implementation expenses related to the core system conversion. Data processing costs experienced a decrease totaling $217,000 for the comparable twelve-month period. During 2018, there was additional de-conversion expense related to the 2018 core conversion. Financial Table 5 reflects the additional breakdown of other noninterest expense.

Income Tax Expense

The Company had income tax expense of $771,000 for 2019 at an effective tax rate of 19.98% compared to income tax expense of $579,000 in 2018 with an effective tax rate of 18.95%. Income taxes computed at the statutory rate are reduced primarily by the eligible amount of interest earned on state and municipal securities, tax-free municipal loans and income earned on bank owned life insurance.

The effective tax rate for 2019 increased compared to 2018 due to higher pre-tax earnings and less available tax-exempt income.

Results of Operations for the Years Ended December 31, 2018 and 2017

Results of operations for the Years Ended December 31, 2018 and 2017 can be found in the 2018 10-K Annual Report filing.

Asset Quality

During the second quarter of 2019, the Company transitioned its in-house incurred loss allowance for loan loss model to an external

vendor incurred loss model that is CECL-ready. The overall financial impact related to switching models is considered immaterial. As

a result of the change in models, there has been a change in the methodology for establishing the allowance for loan losses, as

54

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

described below.

Default in the allowance for loan loss model is now considered 90 days past due, whereas default was defined as a charge-off event in the previous model. This increases the probabilities of default for the Company, but reduces the loss given default

ratio in the portfolio.

Probabilities of default are now more representative of the Company’s customers. Previously, an analysis was performed with a sample of North Carolina consumers to calculate the probabilities of default by credit score. In the new model, the Company is able to track probabilities of default based on historical information of loans in the portfolio. This is the largest impact of the model transition, resulting in an immaterial recovery of provision for loan losses.

The qualitative factors used in the model include adjustment to historical rates for the impact of the recession in the last business cycle, current volatility in the market, and management’s analysis of local economic factors and industry-specific outlooks.

The Company’s allowance for loan loss is established through charges to earnings in the form of a provision for loan losses. The allowance is increased by provisions charged to operations, decreased by recoveries of amounts previously charged off and is reduced by recovery of provisions and loans charged off. Management continuously evaluates the adequacy of the allowance for loan loss. In evaluating the adequacy of the allowance, management considers the following: the growth, composition and industry diversification of the portfolio; historical loan loss experience; current delinquency levels; adverse situations that may affect a borrower’s ability to repay; estimated value of any underlying collateral; prevailing economic conditions and other relevant factors. The Company’s credit administration function, through a review process, periodically validates the accuracy of the initial risk grade assessment. In addition, as a given loan’s credit quality improves or deteriorates, the credit administration department has the responsibility to change the borrower’s risk grade accordingly. For loans determined to be impaired, the allowance is based on either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price or the estimated fair value of the underlying collateral less the selling costs. This evaluation is inherently subjective, as it requires material estimates, including the amounts and timing of future cash flows expected to be received on impaired loans, which may be susceptible to significant change. In addition, regulatory agencies, as an integral part of their examination process, periodically review the allowance for loan losses and may require additions for estimated losses based upon judgments different from those of management.

Management uses a risk-grading program designed to evaluate the credit risk in the loan portfolio. In this program, risk grades are initially assigned by loan officers, then reviewed and monitored by credit administration. This process includes the maintenance of an internally classified loan list that is designed to help management assess the overall quality of the loan portfolio and the adequacy of the allowance for loan losses. In establishing the appropriate classification for specific assets, management considers, among other factors, the estimated value of the underlying collateral, the borrower’s ability to repay, the borrower’s payment history and the current delinquent status. Because of this process, certain loans are deemed as impaired and evaluated as an impaired loan.

The allowance for loan loss represents management’s best estimate of an appropriate amount to provide for probable losses inherent in the loan portfolio in the normal course of business. While management believes that it uses the best information available to establish the allowance for loan loss, future adjustments to the allowance may be necessary and results of operations could be adversely affected if circumstances differ from the assumptions used in making the determinations. Furthermore, while management believes it has established the allowance for loan loss in conformity with GAAP, there can be no assurance that banking regulators, in reviewing the Company’s portfolio, will not require an adjustment to the allowance for loan loss. In addition, because future events affecting borrowers and collateral cannot be predicted with certainty, there can be no assurance that the existing allowance for loan loss is adequate or that increases will not be necessary, should the quality of any loans deteriorate because of the factors discussed herein. Any material increase in the allowance for loan loss may adversely affect the Company’s financial condition and results of operations.

At December 31, 2019, the levels of our impaired loans, which includes all loans in nonaccrual status, TDRs and other loans deemed by management to be impaired, were $6.8 million compared to $4.5 million at December 31, 2018, a net increase of $2.3 million. Total nonaccrual loans, which are a component of impaired loans, increased $1.9 million from $1.0 million at December 31, 2018 to $2.9 million at December 31, 2019. During 2019, eight relationships totaling $3.1 million were added to impaired loans. These additions were offset by foreclosing two relationships for $190,000, pay offs of eight impaired relationships totaling $307,000, along with contractual pay downs on existing impaired loans.

The allowance expressed as a percentage of gross loans held for investment decreased ten basis points from 0.65% at December 31, 2018 to 0.55% at December 31, 2019. The decrease is a result of continued improvement in credit quality of the overall portfolio. The collectively evaluated reserve allowance as a percentage of collectively evaluated loans was 0.61% at December 31, 2018 and 0.52% at December 31, 2019 which was driven by the net recoveries of the Company in 2019 of $281,000, reduction in past due loans 30-89

55

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

days from $1.1 million at December 31, 2018 to $614,000 at December 31, 2019, and improving credit quality of the overall loan portfolio as consumer credit scores continue to improve. The individually evaluated allowance as a percentage of individually evaluated loans decreased from 3.43% to 2.06% for the same periodswhich was driven by the addition of one large relationship moving to impaired status. The relationship is $2.1 million; however, it is sufficiently collateralized to prevent loss so there is no reserve allocated in the impairment analysis. The portion of the Company’s allowance for loan loss model related to general reserves captures the mean loss of individual loans within the loan portfolio and adds additional loss based on economic uncertainty and volatility. Specifically, the Company calculates probable losses on loans by computing a probability of loss and multiplying that by a loss given default derived from historical experience, thus deriving the estimated loss scenario by FDIC call report codes. Together, these components, as well as a reserve for qualitative factors based on management’s discretion of economic conditions and portfolio concentrations form the basis of the allowance model. The loans that are impaired and included in the specific reserve are excluded from these calculations.

The Company assesses the probability of losses inherent in the loan portfolio using probability of default data acquired from a third-party vendor representing a one-year loss horizon for each obligor. The Company updates the data inputs into the model; specifically, the loss given default and the probability of defaults obtained from the vendor annually during the second quarter. The Company updates the credit scores that are one of the components used within the allowance model semi-annually, during the first and third quarters. The Company will consider an update to credit scores in the fourth quarter based on economic and other conditions, if needed. The continued improvement in credit quality coupled with the continued trend of overall improvement in credit scores resulted in our average customer credit score increasing five points from 765 to 770 during 2019. The improvement in credit scores has been the major driver in the overall decrease in the allowance for loan losses.

The ratio of nonperforming loans, which consist of nonaccrual loans and loans past due 90 days and still accruing, to total loans increased from 0.28% at December 31, 2018, to 0.82% at December 31, 2019. The increase is related to the large impaired relationship discussed previously, along with the decline of the overall portfolio.

Management believes the current level of the allowance for loan loss is appropriate in light of the risk inherent in the loan portfolio.

During 2019, other real estate owned decreased $553,000. The Company sold six pieces of foreclosed property totaling $598,000 realizing a net loss of $40,000. The Company also had recoveries of reserves totaling $20,000 on the remaining existing property. However, the Company foreclosed on three loan relationships totaling $267,000, which were added to other real estate owned in 2019.

Troubled debt restructured loans at December 31, 2019 totaled $3.9 million compared to $3.4 million at December 31, 2018 and are included in impaired loans. At December 31, 2019, all troubled debt restructured loans were on an accruing basis with the exception of one relationship totaling $26,000 that was in nonaccrual.

The following nonperforming loan table shows the comparison for the past five years:

Nonperforming Assets
(dollars in thousands)
	At December 31,
	2019			2018			2017			2016			2015
Nonperforming Assets:
Accruing loans past due 90 days or more	$	—		$	—		$	—		$	—		$	—
Nonaccrual loans		2,922			1,044			1,025			1,450			783
Other real estate owned		494			1,047			2,349			4,176			4,994
Total nonperforming assets	$	3,416		$	2,091		$	3,374		$	5,626		$	5,777
Allowance for loan losses	$	1,981		$	2,374		$	2,458		$	2,707		$	2,884
Nonperforming loans to total loans		0.82	%		0.28	%		0.29	%		0.42	%		0.24	%
Allowance for loan losses to total loans		0.55	%		0.65	%		0.69	%		0.79	%		0.90	%
Nonperforming assets to total assets		0.52	%		0.33	%		0.58	%		1.03	%		1.09	%
Allowance for loan losses to nonperforming loans		67.80	%		227.38	%		239.80	%		186.69	%		368.23	%

56

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

Capital Resources

The Company continues to maintain capital ratios that support its asset growth. In 2013, bank regulatory agencies approved regulatory capital guidelines (“Basel III”) aimed at strengthening existing capital requirements for banking organizations.  The rules include a common equity Tier 1 capital to risk-weighted assets minimum ratio of 4.50%, a minimum ratio of Tier 1 capital to risk-weighted assets of 6.00%, require a minimum ratio of total capital to risk-weighted assets of 8.00%, and require a minimum Tier 1 leverage ratio of 4.00%. A capital conservation buffer, comprised of common equity Tier 1 capital, was also established above the regulatory minimum capital requirements. This capital conservation buffer began phasing in on January 1, 2016 at 0.625% of risk-weighted assets and increased each subsequent year by an additional 0.625% until reaching its final level of 2.50% on January 1, 2019. Strict eligibility criteria for regulatory capital instruments were also implemented under the rules. The rules also revise the definition and calculation of Tier 1 capital, total capital, and risk-weighted assets.

The phase-in period for the rules became effective for the Company and its subsidiary bank on January 1, 2015, with full compliance of all the rules’ requirements phased in over a multi-year schedule, becoming fully phased-in on January 1, 2019. Pursuant to the Federal Reserve’s Small Bank Holding Company Policy Statement, the Company is exempt from Basel III. As of December 31, 2018, the Company and its subsidiary bank continue to exceed minimum capital standards and remain well-capitalized under applicable capital adequacy rules.

In January 2013, the Company’s subsidiary bank issued $7.9 million of Fixed Rate Noncumulative Perpetual Preferred Stock, Series B. The preferred stock qualifies as Tier 1 capital at each bank and pays dividends at a rate of 5.30%. The offering raised $7.9 million less issuance costs of $113,000.

During the third quarter of 2013, the Company’s subsidiary bank raised an additional $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. The offering raised $2.8 million less issuance costs of $23,000.

During the third quarter of 2019, the Company conducted a private placement offering of fixed rate junior subordinated debt securities at $1,000 per security with a required minimum investment of $50,000. The offering raised $10.0 million, of which the entire $10.0 million was outstanding at December 31, 2019. These securities have a final maturity date of September 30, 2029 and may be redeemed by the Company after September 30, 2024. The junior subordinated debt pays interest quarterly at an annual fixed rate of 5.25%. All proceeds of this private placement qualify and are included in the calculation of Tier 2 capital. Once the final maturity drops under five years, the Company must impose a twenty percent annual reduction per year of the amount of the proceeds from the sale of these securities that are eligible to be counted as Tier 2 capital. The Company will have a twenty percent reduction beginning at September 30, 2024.

The Company expects to continue to exceed required minimum capital ratios without altering current operations or strategy. Note 15 to the Consolidated Financial Statements presents additional information regarding the Company’s and its subsidiary banks’ capital ratios.

Dividends

The Board of Directors of Uwharrie Capital Corp declared a 2% stock dividend in each of 2019, 2018, and 2017. All references in this Annual Report to net income per share and weighted average common and common equivalent shares outstanding reflect the effects of these stock dividends.

Liquidity

Liquidity, the ability to raise cash when needed without adversely affecting profits, is managed primarily by the selection of asset mix and the maturity mix of liabilities. Maturities and the marketability of securities and other funding sources provide a source of liquidity to meet deposit fluctuations. Maturities in the securities portfolio, presented in Financial Table 3, are supported by cash flows from mortgage-backed securities that have longer-term contractual maturities. Other funding sources at year-end 2019 included $28.0 million in federal funds lines of credit from correspondent banks and approximately $56.0 million of remaining credit availability from the Federal Home Loan Bank. The Company may also borrow from the Federal Reserve Bank discount window with credit availability of $19.2 million. Growth in deposits is typically the primary source of funding for loans, supported by long-term credit available from the Federal Home Loan Bank.

57

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

At December 31, 2019, short-term borrowings amounted to $626,000. Long-term debt at that date consisted of junior subordinated debt of $10.0 million.

Management believes that the Company’s current sources of funds provide adequate liquidity for its current cash flow needs.

Contractual Obligations

The following table reflects the contractual obligations of the Company outstanding as of December 31, 2019.

	Payments Due by Period (in thousands)
			On Demand
			or less						After
	Total		than 1 year		1-3 Years		3-5 Years		5 Years
Contractual Obligations
Short-term debt	$	626	$	626	$	—	$	—	$	—
Long-term debt		9,992		—		—		—		9,992
Operating leases		2,261		381		572		462		846
Total contractual cash obligations, excluding deposits		12,879		1,007		572		462		10,838
Deposits		585,878		561,783		20,460		1,873		1,762
Total contractual cash obligations, including deposits	$	598,757	$	562,790	$	21,032	$	2,335	$	12,600

Critical Accounting Policy

A critical accounting policy is one that is both very important to the portrayal of the Company’s financial condition and results, and requires management’s most difficult, subjective and/or complex judgments. What makes these judgments difficult, subjective and/or complex is the need to make estimates about the effects of matters that are inherently uncertain. Refer to Note 1 in the consolidated financial statements for more information about these and other accounting policies utilized by the Company.

Allowance for Loan Losses

The allowance for loan loss is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan loss is evaluated both individually and collectively by loan class on a regular basis by management and is based upon management’s periodic review of the collectability of the loans in light of historical experiences. The nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay; estimated value of any underlying collateral and prevailing economic conditions are the key factors. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. In addition, regulatory examiners may require the Company to recognize adjustments to the allowance for loan losses based on their judgment about information available to them at the time of their assessment.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis for commercial and construction loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent.

58

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

Income Taxes

The calculation of the Company’s income tax expense is complex and requires the use of many estimates and judgments in its determination. Management’s determination of the realization of the net deferred tax asset is based upon management’s evaluation of positive and negative evidence related to cumulative pretax earnings over a three-year period and projected earnings trends. This evidence is reviewed to determine if it is more likely than not that the net deferred tax asset will be realized.

Valuation of Foreclosed Assets

Assets acquired through, or in lieu of, foreclosure are held for sale and are initially recorded at fair value less estimated cost to sell at the date of foreclosure, establishing a new cost basis. Principal and interest losses existing at the time of acquisition of such assets are charged against the allowance for loan losses and interest income, respectively. Subsequent to foreclosure, management periodically performs valuations and the assets are carried at the lower of carrying amount or fair value less estimated cost to sell.

Off-Balance Sheet Arrangements

The Company has various financial instruments (outstanding commitments) with off-balance sheet risk that are issued in the normal course of business to meet the financing needs of its customers. See Note 13 to the consolidated financial statements for more information regarding these commitments and contingent liabilities.

Interest Rate Sensitivity

Net Interest Income (Margin) is the single largest component of revenue for the Company. Net Interest Margin is the difference between the yield on earning assets and interest paid on interest-bearing liabilities. The margin can vary over time as interest rates change. The variance fluctuates based on both the timing (repricing) and magnitude of maturing assets and liabilities.

To identify interest rate sensitivity, a common measure is a gap analysis, which reflects the difference or “gap” between rate sensitive assets and liabilities over various periods. While management reviews this information, it has implemented the use of an income simulation model, which calculates expected future Net Interest Income (Margin) based on projected interest-earning assets, interest-bearing liabilities and forecasted interest rates along with multiple other forecasted assumptions. Management believes this provides a more relevant view of interest rate risk sensitivity than the traditional gap analysis because the gap analysis ignores optionality embedded in the balance sheet, such as prepayments or changes based on interest rates. The income simulation model allows a comparison of flat, rising and falling rate scenarios to determine the interest rate sensitivity of earnings in varying interest rate environments.

The Company models immediate rising and declining rate shocks of up to 4% (in 1% intervals) on its subsidiary bank, using a static balance sheet for a two-year horizon, as preferred by regulators. The most recent consolidated 2% rate shock projections for a one-year horizon, indicates a negative impact of (16.70%) on Net Interest Income (Margin) in rates down scenario and a positiveimpact of 12.10% on Net Interest Income (Margin) in a rates up scenario. Based on the most recent twelve-month forecast, the subsidiary bank is asset sensitive and may experience some negative impact to earnings should interest rates decline. While many interest-bearing assets would reprice in a declining interest rate environment; many liabilities are already approaching 0% interest rates. The subsidiary bank has the potential to benefit from a rising interest rate environment, but current market deposit pricing and embedded options in the balance sheet may limit the upside potential.

The principal goals for asset liability management for the Company are to maintain adequate levels and sources of liquidity and to manage interest rate risk. Interest rate risk management attempts to balance the effects of interest rate changes on both interest-sensitive assets and interest-sensitive liabilities to protect Net Interest Income (Margin) from wide fluctuations as a result of changes in market interest rates. To that end, management has recommended and the board has approved policy limits that minimize the downside risk from interest rate shifts. The aforementioned ratios are within those stated limits of -18% for the respective modeled scenarios at the subsidiary bank and combined. Managing interest rate risk is an important factor to the long-term viability of the Company since Net Interest Income (Margin) is such a large component of earnings. The Company’s Asset Liability Management Committee (ALCO) monitors market changes in interest rates and assists with the pricing of loans and deposit products while considering the funding source needs, asset growth projections, and necessary operating liquidity.

59

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

Financial Table 1

Average Balances and Net Interest Income Analysis

	2019							2018							2017
			Interest		Average					Interest		Average					Interest		Average
	Average		Income/		Yield/			Average		Income/		Yield/			Average		Income		Yield
(dollars in thousands)	Balance		Expense		Rate (1)			Balance		Expense		Rate (1)			Balance		Expense		Rate (1)
Interest-earning assets
Taxable securities	$	84,206		1,680		2.00	%	$	88,328		1,497		1.69	%	$	95,831		1,582		1.65	%
Non-taxable securities (1)		16,569		408		3.08	%		17,580		434		3.05	%		17,194		439		3.61	%
Short-term investments		130,985		2,702		2.06	%		93,566		1,737		1.86	%		65,244		750		1.15	%
Taxable loans (2)		362,728		18,727		5.16	%		362,002		17,954		4.96	%		340,547		16,301		4.79	%
Non-taxable loans (1)		9,523		250		3.28	%		10,128		251		3.06	%		10,684		268		3.54	%
Total interest-earning assets		604,011		23,767		3.96	%		571,604		21,873		3.85	%		529,500		19,340		3.71	%
Non-earning assets
Cash and due from banks		2,695							5,905							6,648
Premises and equipment, net		16,740							15,037							14,211
Interest receivable and other		22,235							19,857							22,271
Total non-earning assets		41,670							40,799							43,130
Total assets	$	645,681						$	612,403						$	572,630
Interest-bearing liabilities
Savings deposits	$	56,589	$	102		0.18	%	$	52,484	$	91		0.17	%	$	44,923	$	49		0.11	%
Interest checking & MMDA		271,496		1,435		0.53	%		304,997		948		0.31	%		279,216		413		0.15	%
Time deposits		101,717		1,450		1.43	%		59,260		273		0.46	%		66,955		252		0.38	%
Total deposits		429,802		2,987		0.69	%		416,741		1,312		0.31	%		391,094		714		0.18	%
Short-term borrowed funds		905		15		1.66	%		1,641		16		0.98	%		2,145		16		0.75	%
Long-term debt		10,051		563		5.60	%		9,643		554		5.75	%		9,534		547		5.74	%
Total interest-bearing liabilities		440,758		3,565		0.81	%		428,025		1,882		0.44	%		402,773		1,277		0.32	%
Noninterest liabilities
Transaction deposits		145,678							131,556							118,258
Interest payable and other		11,252							8,354							7,057
Total liabilities		597,688							567,935							528,088
Shareholders’ equity		47,993							44,468							44,542
Total liabilities and shareholders' equity	$	645,681						$	612,403						$	572,630
Interest rate spread						3.15	%						3.41	%						3.39	%
Net interest income and net interest    margin			$	20,202		3.37	%			$	19,991		3.53	%			$	18,063		3.47	%

1) Yields related to securities and loans exempt from federal and/or state income taxes are stated on a fully tax-equivalent basis, assuming a 21.00% tax rate for 2019 and 2018 and a 34.00% tax rate for 2017.

2) Nonaccrual loans are included in loans, net of unearned income.

60

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

Financial Table 2

Volume and Rate Variance Analysis

	2019 Versus 2018									2018 Versus 2017
							Net									Net
(dollars in thousands)	Volume			Rate			Change			Volume			Rate			Change
Interest-earning assets
Taxable securities	$	(76	)	$	259		$	183		$	(126	)	$	41		$	(85	)
Non-taxable securities		(25	)		(1	)		(26	)		10			(15	)		(5	)
Short-term investments		733			232			965			426			561			987
Taxable loans		37			736			773			1,046			607			1,653
Non-taxable loans		(15	)		14			(1	)		(14	)		(3	)		(17	)
Total interest-earning assets		654			1,240			1,894			1,342			1,191			2,533
Interest-bearing liabilities
Savings deposits		7			4			11			11			31			42
Transaction and MMDA deposits		(141	)		628			487			59			476			535
Other time deposits		400			777			1,177			(32	)		53			21
Short-term borrowed funds		(10	)		9			(1	)		(4	)		4			0
Long-term debt		23			(14	)		9			6			1			7
Total interest-bearing liabilities		279			1,404			1,683			40			565			605
Net interest income	$	375		$	(164	)	$	211		$	1,302		$	626		$	1,928

The above table analyzes the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities. The table distinguishes between (i) changes attributable to volume (changes in volume multiplied by the prior period’s rate), (ii) changes attributable to rate (changes in rate multiplied by the prior period’s volume), and (iii) net change (the sum of the previous columns). The change attributable to both rate and volume (changes in rate multiplied by changes in volume) has been allocated equally to the change attributable to volume and the change attributable to rate.

61

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

Financial Table 3

Investment Securities Portfolio Analysis

	December 31, 2019							December 31, 2018							December 31, 2017
			Estimated							Estimated							Estimated
	Amortized		Fair		Book			Amortized		Fair		Book			Amortized		Fair		Book
(dollars in thousands)	Cost		Value		Yield(1)			Cost		Value		Yield(1)			Cost		Value		Yield(1)
Securities available for sale
U.S. Treasury
Due within twelve months	$	4,976	$	5,012		2.66	%	$	—	$	—		—		$	—	$	—		—
Due after one but within five years		—		—		—			4,944		4,955		2.66	%		—		—		—
		4,976		5,012		2.66	%		4,944		4,955		2.66	%		—		—		—
U.S. Government agencies
Due within twelve months		—		—		—			17,504		17,398		1.24	%		—		—		—
Due after one but within five years		18,958		18,945		1.55	%		25,093		24,398		1.63	%		42,737		41,968		1.47	%
Due after five but within ten years		6,911		6,741		1.94	%		6,626		6,399		1.78	%		8,678		8,558		1.91	%
Due after ten years		—		—		—			3,712		3,721		2.65	%		5,107		5,089		1.79	%
		25,869		25,686		1.66	%		52,935		51,916		1.59	%		56,522		55,615		1.57	%
Mortgage-backed securities
Due after one but within five years		7,137		7,123		1.95	%		1,557		1,544		2.57	%		1,148		1,154		2.46	%
Due after five but within ten years		16,685		17,059		2.62	%		7,815		7,587		2.06	%		6,659		6,582		2.03	%
Due after ten years		14,483		14,394		2.37	%		7,845		7,571		2.09	%		13,446		13,155		1.94	%
		38,305		38,576		2.40	%		17,217		16,702		2.12	%		21,253		20,891		2.00	%
State and political
Due within twelve months		—		—		—			1,010		1,014		3.25	%		810		820		5.95	%
Due after one but within five years		1,334		1,336		3.64	%		1,079		1,064		3.23	%		1,863		1,866		3.37	%
Due after five but within ten years		1,398		1,423		2.74	%		1,688		1,646		3.13	%		1,971		1,943		3.48	%
Due after ten years		11,205		11,462		3.02	%		9,596		9,231		3.10	%		9,724		9,570		2.45	%
		13,937		14,221		3.05	%		13,373		12,955		3.12	%		14,368		14,199		2.91	%
Corporate Bonds
Due within twelve months		2,808		2,815		2.51	%		—		—		—			—		—		—
Due after one but within five years		2,210		2,214		2.75	%		5,030		4,771		2.94	%		2,827		2,821		2.15	%
Due after five but within ten years		—		—		—			—		—		—			2,215		2,217		1.50	%
		5,018		5,029		2.62	%		5,030		4,771		2.94	%		5,042		5,038		1.86	%
Total Securities available for sale
Due within twelve months		7,784		7,827		2.61	%		18,514		18,412		1.35	%		810		820		5.95	%
Due after one but within five years		29,639		29,618		1.83	%		37,703		36,732		2.02	%		48,575		47,809		1.61	%
Due after five but within ten years		24,994		25,223		2.44	%		16,129		15,632		2.06	%		19,523		19,300		2.06	%
Due after ten years		25,688		25,856		2.65	%		21,153		20,523		2.65	%		28,277		27,814		2.09	%
	$	88,105	$	88,524		2.31	%	$	93,499	$	91,299		2.04	%	$	97,185	$	95,743		1.88	%

1) Yields on securities and investments exempt from federal and/or state income taxes are stated on a fully tax- equivalent basis, assuming a 21.00% tax rate for 2019 and 2018 and a 34.00% tax rate for 2017.

62

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

Financial Table 3

Investment Securities Portfolio Analysis (Continued)

	December 31, 2019							December 31, 2018							December 31, 2017
			Estimated							Estimated							Estimated
	Amortized		Fair		Book			Amortized		Fair		Book			Amortized		Fair		Book
(dollars in thousands)	Cost		Value		Yield(1)			Cost		Value		Yield(1)			Cost		Value		Yield(1)
Securities held to maturity
U.S. Government agencies
Due after one but within five years	$	578	$	583		2.69	%	$	—	$	—		—		$	—	$	—		—
Due after five but within ten years		—		—		—			855		843		2.42	%		1,348		1,339		2.49	%
		578		583		2.69	%		855		843		2.42	%		1,348		1,339		2.49	%
State and political
Due within twelve months		1,501		1,502		1.87	%		—		—		—			—		—		—
Due after one but within five years		4,397		4,457		2.40	%		5,545		5,493		2.21	%		3,694		3,681		2.28	%
Due after five but within ten years		928		929		2.15	%		1,332		1,329		2.42	%		3,231		3,231		3.03	%
		6,826		6,888		2.25	%		6,877		6,822		2.25	%		6,925		6,912		2.63	%
Corporate Bonds
Due within twelve months		3,024		3,028		2.76	%		1,543		1,534		2.73	%		—		—		—
Due after one but within five years		—		—		—			1,562		1,551		2.79	%		3,185		3,210		2.76	%
Due after five but within ten years		3,000		3,000		5.50	%		—		—		—			—		—		—
		6,024		6,028		4.13	%		3,105		3,085		2.76	%		3,185		3,210		2.76	%
Total Securities held to maturity
Due within twelve months		4,525		4,530		2.46	%		1,543		1,534		2.73	%
Due after one but within five years		4,975		5,040		2.43	%		7,107		7,044		2.34	%		3,694		3,681		2.51	%
Due after five but within ten years		3,928		3,929		4.71	%		2,187		2,172		2.42	%		7,764		7,780		2.87	%
	$	13,428	$	13,499		3.11	%	$	10,837	$	10,750		2.41	%	$	11,458	$	11,461		2.65	%

1) Yields on securities and investments exempt from federal and/or state income taxes are stated on a fully tax- equivalent basis, assuming a 21.00% tax rate for 2019 and 2018 and a 34.00% tax rate for 2017.

Financial Table 4

Noninterest Income

	Year Ended December 31,
(dollars in thousands)	2019			2018		2017
Service charges on deposit accounts	$	1,348		$	1,220	$	1,169
Other banking fees		499			722		585
Interchange and card transaction fees, net		826			648		656
Asset management fees		1,716			1,529		1,481
Brokerage commissions		472			370		608
Other noninterest income		290			357		593
Income from mortgage loan sales		3,835			2,980		3,345
Security gains (losses)		(35	)		—		(14	)
Other gains (losses) from sale of assets		54			453		2
Total noninterest income	$	9,005		$	8,279	$	8,425

63

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

Financial Table 5

Other Noninterest Expense

	Year Ended December 31,
(dollars in thousands)	2019		2018		2017
Postage	$	186	$	204	$	199
Telephone and data lines		187		182		166
Office supplies and printing		102		180		130
Shareholder relations expense		159		162		167
Dues and subscriptions		256		257		221
Other		979		932		1,126
Total other noninterest expense	$	1,869	$	1,917	$	2,009

Financial Table 6

Loan Portfolio Composition

	At December 31,
	2019						2018						2017
				% of Total						% of Total						% of Total
(dollars in thousands)	Amount			Loans			Amount			Loans			Amount			Loans
Loan type:
Commercial	$	59,075			16.49	%	$	57,176			15.45	%	$	54,912			15.38	%
Real estate - construction		30,643			8.55	%		38,946			10.52	%		45,210			12.66	%
Real estate - residential		122,586			34.22	%		129,105			34.88	%		128,529			36.01	%
Real estate - commercial		130,998			36.57	%		130,634			35.29	%		114,712			32.13	%
Consumer		12,957			3.62	%		12,159			3.29	%		10,774			3.02	%
Other		1,939			0.54	%		2,110			0.57	%		2,838			0.80	%
Total loans		358,198			100.00	%		370,130			100.00	%		356,975			100.00	%
Less:
Allowance for loan losses		(1,981	)					(2,374	)					(2,458	)
Unearned net loan fees		(248	)					(160	)					(104	)
Net loans	$	355,969					$	367,596					$	354,413

	At December 31,
	2016						2015
				% of Total						% of Total
	Amount			Loans			Amount			Loans
Loan type:
Commercial	$	55,752			16.31	%	$	52,311			16.34	%
Real estate - construction		32,344			9.46	%		23,321			7.29	%
Real estate - residential		132,514			38.77	%		132,799			41.49	%
Real estate - commercial		109,752			32.11	%		101,198			31.62	%
Consumer		9,711			2.84	%		8,982			2.81	%
Other		1,687			0.49	%		1,481			0.45	%
Total loans		341,760			100.00	%		320,092			100.00	%
Less:
Allowance for loan losses		(2,707	)					(2,884	)
Unearned net loan costs		69						40
Net loans	$	339,122					$	317,248

64

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

Financial Table 7

Selected Loan Maturities

	December 31, 2019
	One Year		One to		Over Five
(dollars in thousands)	or Less		Five Years		Years		Total
Commercial and agricultural	$	10,486	$	14,203	$	34,386	$	59,075
Real estate – construction		12,641		3,936		14,066		30,643
Total selected loans	$	23,127	$	18,139	$	48,452	$	89,718
Fixed rate loans	$	10,705	$	24,453	$	39,929	$	75,087
Sensitivity to rate changes:
Variable interest rates	$	23,652	$	18,044	$	241,167	$	282,863

Financial Table 8

Activity in the Allowance for Loan Loss

	At or for the Year Ended December 31,
(dollars in thousands)	2019			2018			2017			2016			2015
Allowance for loan losses at beginning of year	$	2,374		$	2,458		$	2,707		$	2,884		$	3,738
Provision for (recovery of) loan losses		(588	)		90			(236	)		(88	)		(620	)
Other		(86	)		—			—			—			—
Loan charge-offs:
Commercial		10			89			16			76			34
Real estate		2			158			107			172			427
Consumer		148			79			85			142			128
Total charge-offs		160			326			208			390			589
Recoveries of loans previously charged off:
Commercial		14			28			75			19			16
Real estate		379			100			82			209			278
Consumer		48			24			38			73			61
Total recoveries		441			152			195			301			355
Net charge-offs (recoveries)		(281	)		174			13			89			234
Allowance for loan losses at end of year	$	1,981		$	2,374		$	2,458		$	2,707		$	2,884
Net charge-offs (recoveries) as a percent of average    loans		(0.08	)%		0.05	%		0.00	%		0.03	%		0.07	%

Financial Table 9

Allocation of the Allowance for Loan Losses

	At December 31,
	2019					2018					2017
			% of Total					% of Total					% of Total
(dollars in thousands)	Amount		Loans (1)			Amount		Loans (1)			Amount		Loans (1)
Commercial	$	337		16.49	%	$	519		15.45	%	$	770		15.38	%
Real estate - construction		150		8.55	%		282		10.52	%		168		12.66	%
Real estate - residential		755		34.22	%		825		34.88	%		971		36.01	%
Real estate - commercial		635		36.57	%		576		35.29	%		497		32.13	%
Other		104		3.62	%		172		3.29	%		52		3.02	%
Unallocated		—		0.54	%		—		0.57	%		—		0.80	%
Total loans	$	1,981		100.00	%	$	2,374		100.00	%	$	2,458		100.00	%

65

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

	At December 31,
	2016					2015
			% of Total					% of Total
	Amount		Loans (1)			Amount		Loans (1)
Commercial	$	636		16.31	%	$	478		16.34	%
Real estate – construction		240		9.46	%		227		7.29	%
Real estate – residential		1,103		38.77	%		1,338		41.49	%
Real estate – commercial		553		32.11	%		653		31.62	%
Other		175		2.84	%		188		2.81	%
Unallocated		—		0.49	%		—		0.45	%
Total loans	$	2,707		100.00	%	$	2,884		100.00	%

(1) Represents total of all outstanding loans in each category as a percent of total loans outstanding.

Financial Table 10

Short Term Borrowings

	2019					2018					2017
(dollars in thousands)	Amount		Rate			Amount		Rate			Amount		Rate
At year-end
Master notes and other secured borrowings		626		0.89	%		1,190		1.49	%		1,752		0.50	%
Notes payable		—		0.00	%		—		0.00	%		—		0.00	%
Short-term line of credit		—		0.00	%		—		0.00	%		—		0.00	%
	$	626		0.89	%	$	1,190		1.49	%	$	1,752		0.50	%
Average for the year
Federal funds purchase	$	2		3.04	%	$	2		2.92	%	$	2		1.95	%
Master notes and other secured borrowings		904		1.61	%		1,638		1.00	%		1,861		0.28	%
Notes payable		—		0.00	%		—		0.00	%		6		5.81	%
Short-term line of credit		—		0.00	%		—		0.00	%		275		3.58	%
Short-term advances from FHLB		—		0.00	%		—		0.00	%		—		0.00	%
	$	906		1.62	%	$	1,640		1.00	%	$	2,144		0.72	%
Maximum month-end balance
Master notes and other secured borrowings		1,486					2,006					2,448
Notes payable		—					—					12
Short-term line of credit		—					—					1,000
Short-term advances from FHLB		—					—					—

Financial Table 11

Maturities of Time Deposits

			Over 3		Over 6
	3 Months		Months to		Months to		Over
(dollars in thousands)	or Less		6 Months		12 Months		12 Months		Total
Time Deposits of $250,000 or more	$	47,485	$	3,401	$	2,980	$	1,816	$	55,682
Other Time Deposits		12,169		11,654		15,827		19,991		59,641
	$	59,654	$	15,055	$	18,807	$	21,807	$	115,323

66

UWHARRIE CAPITAL CORP

Board of Directors

Merlin Amirtharaj	Thomas M. Hearne, Jr.	James E. Nance
Retired; previously,	Retired; previously,	Founder and Managing Member
Associate Vice President of the	Geopavement Engineer	North State Acquisitions, LLC
School of Business and Technology	North Carolina Department
Stanly Community College	of Transportation	Chris M. Poplin
		Chief Financial Officer and
Dean M. Bowers	Matthew R. Hudson	Chief Operating Officer
Regional Sales Manager/Co-Owner	General Manager and Vice President	Faison Enterprises, Inc.
Quality Equipment, LLC	Hudson Pool Distributors, Inc.
		Frank A. Rankin, III
Joe S. Brooks	Harvey H. Leavitt, III	Board Chair
Owner and Manager	Owner and Operator	Chair, Board of Directors
Brothers Precision Tool Co.	Leavitt Funeral Home	Concord Engineering &
		Surveying, Inc.
James O. Campbell	W. Chester Lowder
Vice President of Construction Sales	Retired; previously,	Randy T. Russell
AvidXchange, Inc.	Director of Livestock Program	President
	Public Policy Division	Sports Med Properties, LLC
Tara G. Eudy	NC Farm Bureau Federation, Incorporated
Board Vice Chair		Vernon A. Russell
President and Treasurer	Wesley A. Morgan	Attorney and Owner
Carolina Title Company, Inc.	General Manager	Vernon A. Russell
	Rolling Hills Gin, LLC	Attorney at Law, PLLC
Deidre B. Foster
Community Volunteer and	Cynthia L. Mynatt	Matthew A. Shaver, MD
Non-Profit Board Member	President	General Surgeon
	Ben Mynatt Buick - GMC	Atrium Health Stanly
Allen K. Furr		and Medical Director of
Secretary and Treasurer		Albemarle Surgical Associates
PEJA, Inc.
DBA East Albemarle Xpress Lube

Executive Officers
	Roger L. Dick	R. David Beaver, III
	President and	Chief Financial Officer and
	Chief Executive Officer	Chief Risk Officer
	Uwharrie Capital Corp;	Uwharrie Capital Corp;
	Chief Executive Officer	President and
	Uwharrie Bank	Chief Financial Officer
		Uwharrie Bank

67

EX-21

Exhibit 21

UWHARRIE CAPITAL CORP

SUBSIDIARIES OF THE REGISTRANT

At December 31, 2019

Subsidiaries of Uwharrie Capital Corp	State of Incorporation
Uwharrie Bank	North Carolina
Uwharrie Investment Advisors, Inc.	North Carolina
Uwharrie Mortgage, Inc.	North Carolina
Subsidiaries of Uwharrie Bank	State of Incorporation
The Strategic Alliance Corporation	North Carolina
BOS Agency, Inc.	North Carolina
Gateway Mortgage, Inc.	North Carolina

EX-23

Exhibit 23

Consent of Independent Registered Public Accounting Firm

Board of Directors

Uwharrie Capital Corp

Albemarle, North Carolina

We consent to the incorporation by reference in the registration statements (No. 333‑146595 and 333‑207626) on Forms S‑8 of Uwharrie Capital Corp of our report dated March 4, 2020, with respect to the consolidated financial statements of Uwharrie Capital Corp and Subsidiaries, which report appears in Uwharrie Capital Corp’s 2019 Annual Report on Form 10‑K.

/s/ Dixon Hughes Goodman LLP

Charlotte, North Carolina

March 4, 2020

EX-31.1

Exhibit 31.1

UWHARRIE CAPITAL CORP

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Roger L. Dick, certify that:

1. I have reviewed this report on Form 10-K of Uwharrie Capital Corp (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 4, 2020	By:	/s/ Roger L. Dick
		Roger L. Dick
		Chief Executive Officer

EX-31.2

Exhibit 31.2

UWHARRIE CAPITAL CORP

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, R. David Beaver, III, certify that:

1. I have reviewed this report on Form 10-K of Uwharrie Capital Corp (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 4, 2020	/s/ R. David Beaver, III
	R. David Beaver, III
	Principal Financial Officer

EX-32

Exhibit 32

Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.ss.1350)

The undersigned hereby certifies that, to his or her knowledge, (i)  the Form 10-K filed by Uwharrie Capital Corp (the “Issuer”) for the fiscal year ended December 31, 2019, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii)  the information contained in that report fairly presents, in all material respects, the financial condition and results of operations of the Issuer on the dates and for the periods presented therein.

Date: March 4, 2020	/s/ Roger L. Dick
	Roger L. Dick
	Chief Executive Officer
Date: March 4, 2020	/s/ R. David Beaver, III
	R. David Beaver, III
	Principal Financial Officer

XML

Premises and Equipment - Major Classes of Premises and Equipment and the Total Accumulated Depreciation (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Property, Plant and Equipment [Line Items]
Total fixed assets	$ 29,438	$ 27,173
Less accumulated depreciation	12,376	12,373
Net fixed assets	17,062	14,800
Land [Member]
Property, Plant and Equipment [Line Items]
Total fixed assets	3,192	3,215
Building and Improvements [Member]
Property, Plant and Equipment [Line Items]
Total fixed assets	15,783	15,150
ROU Assets [Member]
Property, Plant and Equipment [Line Items]
Total fixed assets	1,945
Furniture, Fixtures and Equipment [Member]
Property, Plant and Equipment [Line Items]
Total fixed assets	$ 8,518	$ 8,808

XML

Long-Term Debt - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Line of credit	$ 98,000,000
Remaining borrowing availability	56,000,000
Long term advances	0		$ 0
Proceeds from Private placement, outstanding balance	$ 9,992,000		$ 9,974,000
Junior Subordinated Debt [Member]
Debt Instrument [Line Items]
Fixed rate junior subordinated debt securities per security		$ 1,000
Minimum investment required under private placement		$ 50,000
Debt securities final maturity date	Sep. 30, 2029
Proceeds from Private placement, outstanding balance	$ 10,000,000
Debt instrument earliest redemption date	Sep. 30, 2024
Interest rate of private placement	5.25%
Final maturity drops period	5 years
Percentage of proceeds from sale of securities imposed as reduction	20.00%
Standby Letters of Credit [Member]
Debt Instrument [Line Items]
Long term advances	$ 42,000,000

XML

Deposits - Schedule of Composition of Time Deposits (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Banking And Thrift [Abstract]
Demand noninterest-bearing	$ 150,283	$ 129,714
Interest checking and money market	263,136	324,391
Savings	57,136	54,784
Time deposits $250,000 and over	55,682	7,920
Other time deposits	59,641	50,092
Total deposits	$ 585,878	$ 566,901	$ 512,628	$ 485,719	$ 467,733
Demand noninterest-bearing, percentage	26.00%	23.00%
Interest checking and money market, percentage	45.00%	57.00%
Savings, percentage	10.00%	10.00%
Time deposits $250,000 and over, percentage	9.00%	1.00%
Other time deposits, percentage	10.00%	9.00%
Total, percentage	100.00%	100.00%

XML

Loan Servicing Assets - Additional Information (Detail) - Mortgage Servicing Assets [Member] - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Finite-Lived Intangible Assets [Line Items]
Unpaid principal balances of mortgage and other loans serviced for others	$ 419.4	$ 418.6
Fair value of mortgage servicing rights	$ 3.1	$ 3.5

XML

Significant Accounting Policies - Accumulated Other Comprehensive Income (Parenthetical) (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Accumulated Other Comprehensive Income Loss [Line Items]
Tax effect on amount reclassified from accumulated other comprehensive income	$ 7	$ 0	$ 4
Unrealized Holding Gains on Available-for-Sale Securities (Net) [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Tax effect on Accumulated Other Comprehensive income (loss) before reclassifications	(595)	171	(185)
Tax effect on amount reclassified from accumulated other comprehensive income	$ (7)	$ 0	$ (4)

XML

Investment Securities - Sales of Securities Available for Sale (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2017
Investments Debt And Equity Securities [Abstract]
Gross proceeds from sales	$ 3,351	$ 8,918
Realized losses from sales	(35)	(14)
Net realized gains (losses)	$ (35)	$ (14)

XML

Loans Held for Investment - Composition of Net Loans Held for Investment by Class (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, Total	$ 358,198	$ 370,130
Less:
Allowance for loan losses	(1,981)	(2,374)	$ (2,458)	$ (2,707)
Deferred loan fees, net	(248)	(160)
Net loans held for investment	355,969	367,596
Commercial [Member]
Less:
Allowance for loan losses	(1,087)	(1,334)	(1,401)	(1,404)
Commercial [Member] | Commercial Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, Total	59,075	57,176
Commercial [Member] | Real Estate - Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, Total	130,998	130,634
Commercial [Member] | Other Real Estate Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, Total	23,043	31,141
Non-Commercial [Member]
Less:
Allowance for loan losses	(894)	(1,040)	$ (1,057)	$ (1,303)
Non-Commercial [Member] | Consumer Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, Total	12,957	12,159
Non-Commercial [Member] | Real Estate 1 - 4 Family Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, Total	7,600	7,805
Non-Commercial [Member] | Real Estate - Residential [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, Total	71,370	76,564
Non-Commercial [Member] | Home Equity [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, Total	51,216	52,541
Non-Commercial [Member] | Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, Total	$ 1,939	$ 2,110

XML

Leases (Tables)

12 Months Ended

Dec. 31, 2019

Lessee Disclosure [Abstract]

Summary of Other Information Related to Operating Leases

The table below depicts information related to the Company’s leases:

	Twelve Months Ended December 31,
	2019
	(in thousands except percent and period data)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	357
ROU assets obtained in exchange for new operating lease liabilities		1,945
Weighted-average remaining lease term - operating leases, in years		7.6
Weighted-average discount rate - operating leases		2.9%

Schedule of Maturities of Lease Expense

A table detailing the lease expense associated with the aforementioned properties is below.

December 31,
(dollars in thousands)
2020	$	381
2021		347
2022		225
2023		229
2024		233
Thereafter		846
Total lease payments		2,261
Less: Interest		(249	)
Present value of lease liabilities	$	2,012

Schedule of Operating Lease Expense

A table detailing the lease expense associated with the aforementioned properties is below.

December 31,
(dollars in thousands)
2019	$	345
2020		345
2021		306
2022		189
2023		189
Thereafter		812
Total		2,186

XML

Allowance for Loan Losses (Tables)

12 Months Ended

Dec. 31, 2019

Receivables [Abstract]

Changes in Allowance for Loan Losses

Changes in the allowance for loan losses for the years ended December 31, 2019, 2018 and 2017 are presented below (the “other” category represents a one-time impact of re-classification for unfunded commitments’ allowance from the allowance for loan losses to an unfunded commitment liability):

Commercial	2019			2018			2017
	(dollars in thousands)
Balance, beginning of year	$	1,334		$	1,401		$	1,404
Provision (recovery) charged to operations		(571	)		132			(72	)
Charge-offs		(11	)		(245	)		(31	)
Recoveries		367			46			100
Net (charge-offs) recoveries		356			(199	)		69
Other		(32	)		—			—
Balance, end of year	$	1,087		$	1,334		$	1,401

Non-Commercial	2019			2018			2017
	(dollars in thousands)
Balance, beginning of year	$	1,040		$	1,057		$	1,303
Provision (recovery) charged to operations		(17	)		(42	)		(164	)
Charge-offs		(149	)		(81	)		(177	)
Recoveries		74			106			95
Net (charge-offs) recoveries		(75	)		25			(82	)
Other		(54	)		—			—
Balance, end of year	$	894		$	1,040		$	1,057

Total	2019			2018			2017
	(dollars in thousands)
Balance, beginning of year	$	2,374		$	2,458		$	2,707
Provision (recovery) charged to operations		(588	)		90			(236	)
Charge-offs		(160	)		(326	)		(208	)
Recoveries		441			152			195
Net (charge-offs) recoveries		281			(174	)		(13	)
Other		(86	)		—			—
Balance, end of year	$	1,981		$	2,374		$	2,458

Schedule of Loans and Reserve Balances by Loan Segment Both Individually and Collectively Evaluated for Impairment

The following table shows period-end loans and reserve balances by loan segment both individually and collectively evaluated for impairment at December 31, 2019 and 2018:

December 31, 2019	Individually Evaluated				Collectively Evaluated				Total
	Reserve		Loans		Reserve		Loans		Reserve		Loans
	(dollars in thousands)
Commercial	$	32	$	3,660	$	1,055	$	209,456	$	1,087	$	213,116
Non-Commercial		109		3,175		785		141,659		894		144,834
Total	$	141	$	6,835	$	1,840	$	351,115	$	1,981	$	357,950

December 31, 2018	Individually Evaluated				Collectively Evaluated				Total
	Reserve		Loans		Reserve		Loans		Reserve		Loans
	(dollars in thousands)
Commercial	$	42	$	1,359	$	1,292	$	217,592	$	1,334	$	218,951
Non-Commercial		112		3,119		928		147,900		1,040		151,019
Total	$	154	$	4,478	$	2,220	$	365,492	$	2,374	$	369,970

Past Due Information of Loan Portfolio by Class

Past due loan information is used by management when assessing the adequacy of the allowance for loan losses. The following tables summarize the past due information of the loan portfolio by class:

December 31, 2019	Loans 30-89 Days Past Due		Loans 90 Days or More Past due and Non - Accrual		Total Past Due Loans		Current Loans		Total Loans		Accruing Loans 90 or More Days Past Due
	(dollars in thousands)
Commercial	$	190	$	—	$	190	$	58,885	$	59,075	$	—
Real estate - commercial		—		2,088		2,088		128,910		130,998		—
Other real estate construction		14		0		14		23,029		23,043		—
Real estate construction		—		—		—		7,600		7,600		—
Real estate - residential		326		752		1,078		70,044		71,122		—
Home equity		57		82		139		51,077		51,216		—
Consumer loan		27		—		27		12,930		12,957		—
Other loans		—		—		—		1,939		1,939		—
Total	$	614	$	2,922	$	3,536	$	354,414	$	357,950	$	—

December 31, 2018	Loans 30-89 Days Past Due		Loans 90 Days or More Past due and Non - Accrual		Total Past Due Loans		Current Loans		Total Loans		Accruing Loans 90 or More Days Past Due
	(dollars in thousands)
Commercial	$	54	$	—	$	54	$	57,122	$	57,176	$	—
Real estate - commercial		—		273		273		130,361		130,634		—
Other real estate construction		—		47		47		31,094		31,141		—
Real estate construction		—		—		—		7,805		7,805		—
Real estate - residential		890		606		1,496		74,908		76,404		—
Home equity		100		118		218		52,323		52,541		—
Consumer loan		86		—		86		12,073		12,159		—
Other loans		—		—		—		2,110		2,110		—
Total	$	1,130	$	1,044	$	2,174	$	367,796	$	369,970	$	—

Composition of Nonaccrual Loans by Class

The composition of nonaccrual loans by class as of December 31, 2019 and 2018 is as follows:

	2019		2018
	(dollars in thousands)
Commercial	$	—	$	—
Real estate - commercial		2,088		273
Other real estate construction		—		47
Real estate 1 – 4 family construction		—		—
Real estate – residential		752		606
Home equity		82		118
Consumer loans		—		—
Other loans		—		—
	$	2,922	$	1,044

Summary of Risk Grades of Portfolio by Class

The tables below summarize risk grades of the loan portfolio by class as of December 31, 2019 and 2018:

December 31, 2019	Pass		Watch		Sub- standard		Doubtful		Total
	(dollars in thousands)
Commercial	$	56,151	$	2,921	$	3	$	—	$	59,075
Real estate - commercial		126,498		1,194		3,306		—		130,998
Other real estate construction		21,253		1,477		313		—		23,043
Real estate 1 - 4 family construction		7,600		—		—		—		7,600
Real estate - residential		67,647		2,464		1,011		—		71,122
Home equity		50,255		879		82		—		51,216
Consumer loans		12,877		79		1		—		12,957
Other loans		1,939		—		—		—		1,939
Total	$	344,220	$	9,014	$	4,716	$	—	$	357,950

December 31, 2018	Pass		Watch		Sub- standard		Doubtful		Total
	(dollars in thousands)
Commercial	$	55,883	$	1,284	$	9	$	—	$	57,176
Real estate - commercial		127,592		1,518		1,524		—		130,634
Other real estate construction		28,711		2,070		360		—		31,141
Real estate 1 - 4 family construction		7,805		—		—		—		7,805
Real estate - residential		69,900		5,470		1,034		—		76,404
Home equity		52,028		395		118		—		52,541
Consumer loans		12,085		73		1		—		12,159
Other loans		2,110		—		—		—		2,110
Total	$	356,114	$	10,810	$	3,046	$	—	$	369,970

Summary of Performing and Nonperforming Loans by Class

The following tables show the breakdown between performing and nonperforming loans by class as of December 31, 2019 and 2018:

December 31, 2019	Performing		Non- Performing		Total
	(dollars in thousands)
Commercial	$	59,075	$	—	$	59,075
Real estate - commercial		128,910		2,088		130,998
Other real estate construction		23,043		—		23,043
Real estate 1 – 4 family construction		7,600		—		7,600
Real estate – residential		70,370		752		71,122
Home equity		51,134		82		51,216
Consumer loans		12,957		—		12,957
Other loans		1,939		—		1,939
Total	$	355,028	$	2,922	$	357,950

December 31, 2018	Performing		Non- Performing		Total
	(dollars in thousands)
Commercial	$	57,176	$	—	$	57,176
Real estate - commercial		130,361		273		130,634
Other real estate construction		31,094		47		31,141
Real estate 1 – 4 family construction		7,805		—		7,805
Real estate – residential		75,798		606		76,404
Home equity		52,423		118		52,541
Consumer loans		12,159		—		12,159
Other loans		2,110		—		2,110
Total	$	368,926	$	1,044	$	369,970

Summary of Loans Deemed Impaired and Specific Reserves Allocated by Class

The tables below summarize the loans deemed impaired and the amount of specific reserves allocated by class as of December 31, 2019, 2018, and 2017:

	As of  December 31, 2019								Year Ended December 31, 2019
			Recorded		Recorded
	Unpaid		Investment		Investment				Average
	Principal		With No		With		Related		Recorded		Interest
	Balance		Allowance		Allowance		Allowance		Investment		Income
	(dollars in thousands)
Commercial	$	4	$	—	$	4	$	—	$	6	$	—
Real estate - commercial		3,612		1,923		1,689		29		2,273		145
Other real estate construction		44		—		44		3		64		3
Real estate 1 -4 family construction		—		—		—		—		—		—
Real estate - residential		3,070		987		2,083		99		3,010		159
Home equity		82		13		69		10		116		5
Consumer loans		23		—		23		—		27		2
Total	$	6,835	$	2,923	$	3,912	$	141	$	5,496	$	314

									Year Ended
	As of  December 31, 2018								December 31, 2018
			Recorded		Recorded
	Unpaid		Investment		Investment				Average
	Principal		With No		With		Related		Recorded		Interest
	Balance		Allowance		Allowance		Allowance		Investment		Income
	(dollars in thousands)
Commercial	$	7	$	—	$	7	$	—	$	32	$	—
Real estate - commercial		1,258		93		1,165		38		1,503		51
Other real estate construction		632		47		47		4		132		3
Real estate 1 -4 family construction		—		—		—		—		—		—
Real estate - residential		3,005		901		2,104		110		3,505		145
Home equity		83		51		32		1		54		3
Consumer loans		31		—		31		1		40		3
Total	$	5,016	$	1,092	$	3,386	$	154	$	5,266	$	205

									Year Ended
	As of  December 31, 2017								December 31, 2017
			Recorded		Recorded
	Unpaid		Investment		Investment				Average
	Principal		With No		With		Related		Recorded		Interest
	Balance		Allowance		Allowance		Allowance		Investment		Income
	(dollars in thousands)
Commercial	$	44	$	10	$	34	$	10	$	25	$	2
Real estate - commercial		1,593		1,305		288		9		1,650		72
Other real estate construction		689		101		50		3		208		5
Real estate 1 -4 family construction		—		—		—		—		3		—
Real estate - residential		3,701		1,319		2,382		171		3,762		179
Home equity		35		22		13		1		66		1
Consumer loans		45		45		—		—		53		4
Total	$	6,107	$	2,802	$	2,767	$	194	$	5,767	$	263

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Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2019

Significant Accounting Policies [Line Items]

Nature of Business

Nature of Business

Uwharrie Capital Corp (the “Company”) was incorporated under North Carolina law for the purpose of becoming the holding company for Bank of Stanly (“Stanly”). On July 1, 1993, Stanly became a wholly-owned subsidiary of the Company through a one-for-one exchange of the common stock of Stanly for common stock of the Company. On September 1, 2013, Bank of Stanly changed its name to Uwharrie Bank (“Uwharrie” or the “Bank”).

Uwharrie was incorporated on September 28, 1983, under the laws of the State of North Carolina and began operations on January 26, 1984 in Albemarle, North Carolina. Deposits with Uwharrie are insured by the Federal Deposit Insurance Corporation (“FDIC”). Uwharrie is under regulation of the Federal Reserve, the FDIC and the North Carolina Commissioner of Banks. In North Carolina, Uwharrie has ten branch locations that provide a wide range of deposit accounts, commercial, consumer, home equity and residential mortgage loans, safe deposit boxes and automated banking.

In 1987, Uwharrie established a wholly-owned subsidiary, BOS Agency, Inc. (“BOS Agency”), which engages in insurance product sales. In 1989, Uwharrie established a second wholly-owned subsidiary, BOS Financial Corporation, for the purpose of conducting business as a “broker dealer” in securities. During 1993, BOS Financial Corporation changed its name to The Strategic Alliance Corporation (“Strategic Alliance”) and was registered as a “broker dealer” and is regulated by the Financial Industry Regulatory Authority (“FINRA”).

The Company formed a new subsidiary, Strategic Investment Advisors, Inc. (“SIA”), during 1998 to provide investment advisory and asset management services. This subsidiary is registered as an investment advisor with the Securities and Exchange Commission. During 2015, SIA changed its name to Uwharrie Investment Advisors, Inc. (“UIA”).

On January 19, 2000, the Company completed its acquisition of Anson BanCorp, Inc. and its subsidiary, Anson Savings Bank. The savings bank retained its North Carolina savings bank charter and became a wholly-owned subsidiary of Uwharrie Capital Corp as Anson Bank & Trust Company (“Anson”), operating out of its main office branch in Wadesboro. Anson was consolidated into Uwharrie Bank effective September 1, 2013.

On August 4, 2000, Uwharrie acquired another subsidiary, Gateway Mortgage, Inc. (“Gateway”), a mortgage origination company. This company is currently inactive and does not affect the Company’s consolidated financial statements.

On April 10, 2003, the Company capitalized a new wholly-owned subsidiary bank, Cabarrus Bank & Trust Company (“Cabarrus”), located in Concord, North Carolina. As of that date, Cabarrus purchased two branch offices located in Cabarrus County from Uwharrie to begin its operation. Cabarrus operated as a commercial bank and provided a full range of banking services. Cabarrus was consolidated into Uwharrie Bank effective September 1, 2013.

On April 7, 2004 Uwharrie Mortgage, Inc. was established as a subsidiary of the Company to serve in the capacity of trustee and substitute trustee under deeds of trust.

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, Uwharrie, UIA and Uwharrie’s subsidiaries, BOS Agency and Strategic Alliance. All significant intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

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.

Cash and Cash Equivalents

Cash and Cash Equivalents

For the purpose of presentation in the consolidated statements of cash flows, cash and cash equivalents are defined as those amounts included in the balance sheet captions “Cash and due from banks” and “Interest-earning deposits with banks.”

Loans Held for Sale

Loans Held for Sale

Loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value in the aggregate. Net unrealized losses, if any, are recognized through a valuation allowance by charges to income.

Loans

Loans

The Company divides the loans it originates into two segments, commercial and noncommercial loans. Commercial loans are broken down into the following classes: commercial loans, real estate commercial loans and other real estate construction loans. Noncommercial loans are divided into the following classes: real estate 1-4 family construction, real estate 1-4 family residential loans, home equity loans, consumer loans and other loans. The ability of the Company’s borrowers to honor their contracts is largely dependent upon the real estate and general economic conditions in the Company’s market area. Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are reported at their outstanding unpaid principal balances adjusted for charge-offs, the allowance for loan losses, and any deferred fees or costs. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield using the effective interest method. The accrual of interest on mortgage and commercial loans is discontinued at the time the loan is 90 days delinquent unless the credit is well-secured and in process of collection. Credit card loans and other personal loans are typically charged off no later than 180 days past due. In all cases, loans are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful. The exception to this policy is credit card loans that remain in accrual status 90 days or more until they are paid current or charged off.

All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income. The interest on these impaired loans is accounted for on a cash basis until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Generally, a minimum of six months of sustained performance is required.

Allowance for Loan Losses

Allowance for Loan Losses

The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses. The provision for loan losses is expensed to earnings. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The Company has different specific risks identified within the loan segments. Specific risks within the commercial loan segment arise with borrowers that are experiencing diminished operating cash flows, depreciated collateral values or prolonged sales and rental absorption periods. Concentrations within the portfolio, if unmanaged, pose additional risk. Occasionally, the Company will purchase participation loans from other institutions. If these loans are not independently underwritten by the Bank, they could carry additional risk. Generally, owner-occupied commercial real estate loans carry less risk than non-owner occupied. Specific risks within the non-commercial portfolio tend to be tied to economic factors including high unemployment and decreased real estate values. Risk to the Company is greater as home values deteriorate more rapidly than amortization in a loan, leaving little to no equity in properties, especially in junior lien positions. Concentration in the portfolio, such as home equity lines of credit, could pose additional risk if not appropriately managed.

The allowance for loan losses is evaluated both individually and collectively by loan class on a regular basis by management. Loans are collectively evaluated based upon management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. Individually evaluated loans are based upon discounted cash flows or the underlying value of the collateral. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. In addition, regulatory examiners may require the Company to recognize adjustments to the allowance for loan losses based on their judgment about information available to them at the time of their assessment.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for commercial and construction loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent. Homogeneous loans are collectively evaluated by loan class for impairment. However, once a loan is deemed impaired, it will be evaluated individually for specific impairment.

Troubled debt restructure loans (TDRs) are modifications of a loan when a borrower is experiencing financial difficulty and the modification involves providing a concession to the existing loan contract. TDRs are considered to be impaired loans and are individually evaluated for impairment.

The portion of the Company’s allowance for loan loss model related to general reserves captures the mean loss of individual loans within the loan portfolio and adds additional loss based on economic uncertainty and volatility. Specifically, the Company calculates probable losses on loans by computing a probability of loss and multiplying that by a loss given default derived from historical experience, thus deriving the estimated loss scenario by FDIC call report codes. Together, these components, as well as a reserve for qualitative factors based on management’s discretion of economic conditions and portfolio concentrations, form the basis of the allowance model. The loans that are impaired and included in the specific reserve are excluded from these calculations.

Loan Servicing Rights

Loan Servicing Rights

The Company capitalizes mortgage and Small Business Administration (SBA) loan servicing rights when loans are sold and the loan servicing is retained. The amortization of servicing rights is realized over the estimated period that net servicing revenues are expected to be received. These projections are based on the amount and timing of estimated future cash flows. The amortization of servicing rights is recognized in the statement of income as an offset to other noninterest income. Servicing assets are periodically evaluated for impairment based upon their fair value. Fair value is based upon discounted cash flows using market-based assumptions. Impairment is recognized through a valuation allowance and charged to other expense.

Transfers of Financial Assets

Transfers of Financial Assets

Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Foreclosed Real Estate

Foreclosed Real Estate

Real estate properties acquired through foreclosure or other proceedings are initially recorded at fair value less costs to sell upon foreclosure, establishing a new cost basis. Annually, valuations are performed and the foreclosed property is adjusted to the lower of cost or fair value of the properties, less costs to sell. Any write-down at the time of transfer to foreclosed properties is charged to the allowance for loan losses. Subsequent write-downs are charged to noninterest expense, and costs related to the improvement of the property are capitalized if the fair value less cost to sell will allow it. If not, these costs are expensed also.

Premises and Equipment

Premises and Equipment

Premises and equipment are stated at cost less accumulated depreciation. Land is carried at cost. Additions and major replacements or betterments which extend the useful lives of premises and equipment are capitalized. Maintenance, repairs and minor improvements are expensed as incurred. Depreciation is computed principally by the straight-line method over estimated useful lives, except in the case of leasehold improvements, which are amortized over the term of the leases, if shorter. Useful lives range from five to seven years for furniture, fixtures and equipment, to ten to thirty-nine years for leasehold improvements and buildings, respectively. Upon retirement or other disposition of the assets, the cost and the related accumulated depreciation are removed from the accounts and any gains or losses are reflected in income. ROU assets that are recognized at the initial adoption of a lease arrangement are included in premises and equipment. More information regarding ROU assets can be found in Note 8 (Leases).

Restricted Stock

Restricted Stock

As a requirement for membership, the Bank invests in the stock of the Federal Home Loan Bank of Atlanta (“FHLB”) and Federal Reserve Bank (“FRB”). These investments are carried at cost. Due to the redemption provisions of these investments, the Company estimated that fair value approximates cost and that this investment was not impaired.

Stock-Based Compensation

Stock-Based Compensation

The Company recognizes the cost of employee services received in exchange for an award of equity instruments in the financial statements over the period the employee is required to perform the services in exchange for the award (presumptively the vesting period). Accounting Standards Codification (ASC) 718 also requires measurement of the cost of employee services received in exchange for an award based on the grant-date fair value of the award. As of December 31, 2019 and December 31, 2018, there are no outstanding awards.

Income Taxes

Income Taxes

The Company and its subsidiaries file a consolidated federal income tax return and separate North Carolina income tax returns. The provision for income taxes in the accompanying consolidated financial statements is provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. We record uncertain tax positions in accordance with ASC 740 on the basis of a two-step process whereby (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold. The tax returns for the Company are subject to audit for the 2016 fiscal year and thereafter. It is the Company’s policy to recognize interest and penalties associated with uncertain tax positions as components of other expenses in the income statement; however, if interest becomes a material amount, it would be reclassified as interest expense. There were no interest or penalties accrued during the years ended December 31, 2019, 2018 and 2017.

Leases

Leases

Operating leases in which we are the lessee are recorded as operating lease ROU assets and operating lease liabilities, included in premises and equipment and other liabilities, respectively, on our consolidated balance sheet. We do not currently have any significant finance leases in which we are the lessee. Operating lease ROU assets represent our right to use an underlying asset during the lease term and operating lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and operating

Note 1 - Significant Accounting Policies (Continued)

lease liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents our incremental collateralized borrowing rate at the lease commencement date. ROU assets are further adjusted for the lease incentives. Operating lease expense, which is comprised of amortization of the ROU asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term, and is recorded in the net occupancy expense in the consolidated statement of income

Revenue Recognition

Revenue Recognition

Under ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”, 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 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 recognize 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.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

ASC 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 does not require any new fair value measurements, but clarifies and standardizes some divergent practices that have emerged since prior guidance was issued. ASC 820 creates a three-level hierarchy under which individual fair value estimates are to be ranked based on the relative reliability of the inputs used in the valuation.

ASC 820 defines fair value as the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, the Company considers the principal or most advantageous market in which those assets or liabilities are sold and considers assumptions that market participants would use when pricing those assets or liabilities. Fair values determined using Level 1 inputs rely on active and observable markets to price identical assets or liabilities. In situations where identical assets and liabilities are not traded in active markets, fair values may be determined based on Level 2 inputs, which exist when observable data exists for similar assets and liabilities. Fair values for assets and liabilities for which identical or similar assets and liabilities are not actively traded in observable markets are based on Level 3 inputs, which are considered to be unobservable.

Among the Company’s assets and liabilities, investment securities available for sale are reported at their fair values on a recurring basis. Certain other assets are adjusted to their fair value on a nonrecurring basis, including other real estate owned, impaired loans, loans held for sale, which are carried at the lower of cost or market; and loan servicing rights, where fair value is determined using similar assets with similar characteristics, when available, or based upon discounted cash flows using market-based assumptions. Deposits, short-term borrowings and long-term obligations are not reported at fair value.

Prices for US Treasury securities are readily available in the active markets in which those securities are traded, and the resulting fair values are shown in the “Level 1 input” column. Prices for government agency securities, mortgage-backed securities and for state, county and municipal securities are obtained for similar securities, and the resulting fair values are shown in the “Level 2 input” column. Prices for all other non-marketable investments are determined based on various assumptions that are not observable. The fair values for these investment securities are shown in the “Level 3 input” column. Non-marketable investment securities, which are carried at their purchase price, include those that may only be redeemed by the issuer.

The Company does not record loans at fair value on a recurring basis. However, from time to time, a loan is considered impaired and an allowance for loan losses is established. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as individually impaired, management measures impairment by using one of several methods including collateral value, fair value of similar debt or discounted cash flows. Those impaired loans not requiring an allowance represent loans for which the present value of the expected repayments or fair value of collateral exceed the recorded investments in such loans. The Company typically bases the fair value of the collateral on appraised values which the Company considers Level 3 valuations.

Foreclosed assets are adjusted to fair value upon transfer of the loans to other real estate owned. Real estate acquired in settlement of loans is recorded initially at the estimated fair value of the property less estimated selling costs at the date of foreclosure. The initial recorded value may be subsequently reduced by additional allowances, which are charged to earnings if the estimated fair value of the property less estimated selling costs declines below the initial recorded value. Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the collateral. The Company typically bases the fair value of the collateral on appraised values which the Company considers Level 3 valuations.

Loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value in the aggregate, based on secondary market prices. Net unrealized losses, if any, are recognized through a valuation allowance by charges to income. These loans are recorded in Level 2.

Comprehensive Income

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 years ended December 31, 2019, 2018 and 2017:

	Year ended December 31,
	2019			2018			2017
	(dollars in thousands)
Beginning Balance	$	(1,694	)	$	(1,107	)	$	(1,318	)
Accumulated Other comprehensive income (loss) before reclassifications,    net of ($595), $171 and ($185)  tax effect, respectively		1,989			(587	)		356
Amounts reclassified from accumulated other comprehensive    income, net of ($7), $0, and ($4) tax effect,    respectively		28			—			10
Net current-period other comprehensive loss		2,017			(587	)		366
Tax Cuts and Jobs Act of 2017, reclassification from AOCI   to retained earnings, tax effect		—			—			(155	)
Ending Balance	$	323		$	(1,694	)	$	(1,107	)

Earnings per Common Share

Earnings per Common Share

The Company had no stock options outstanding at December 31, 2019 or December 31, 2018.

Basic earnings per share (“EPS”) excludes dilution and is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS 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 earnings of the entity. On November 12, 2019, the Company’s Board of Directors declared a 2% stock dividend payable on December 9, 2019 to shareholders of record on November 25, 2019. All information presented in the accompanying consolidated financial statements regarding earnings per share and weighted average number of shares outstanding has been computed giving effect to this stock dividend.

The computation of weighted average shares used in the calculation of basic and dilutive earnings per share is summarized below:

	2019		2018		2017
Weighted average number of common shares used in    computing basic net income per common share		7,199,262		7,229,333		7,427,036
Effect of dilutive stock options		—		—		768
Weighted average number of common shares and dilutive    potential common shares used in computing diluted net    income per common share		7,199,262		7,229,333		7,427,804

   Note 1 - Significant Accounting Policies (Continued)

Noncontrolling Interest

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.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

ASU 2016-02, “Leases, Topic 842” was adopted January 1, 2019. 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 previous 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 ROU 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. The impact of the new standard increased assets by $1.9 million and liabilities by $2.0 million, from the year ended December 31, 2018 to the year ended December 31, 2019. We currently have three properties that we operate with a lease term greater than one year.

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 twelve months ended December 31, 2019, gross interchange and card transaction fees totaled $2.0 million while related network costs totaled $1.2 million. On a net basis, we reported $826,000 as interchange and card transaction fees in the accompanying Consolidated Statement of Income for the twelve months ended December 31, 2019. For the twelve months ended December 31, 2018 and December 31, 2017, interchange and card transaction fees were $1.7 million and $1.6 million, respectively, on a gross basis while related network costs were $1.1 million and $913,000, respectively. As a result of the adoption of this standard, balances in prior years were re-classified to reflect the net presentation. In 2018 and 2017, interchange and card transaction fees, net were $648,000 and $656,000, respectively.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. ASU 2016-13 requires an entity to utilize a new impairment model known as the current expected credit loss (“CECL”) model to estimate its lifetime “expected credit loss” and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. The CECL model is expected to result in earlier recognition of credit losses. ASU 2016-13 also requires new disclosures for financial assets measured at amortized cost, loans and available-for-sale debt securities. The updated guidance is effective for interim and annual reporting periods beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. During 2019, the effective date was extended to fiscal years ended on or after December 15, 2022 for public entities that qualify as smaller reporting companies, per the Securities Exchange Commission definition, which currently includes the Company. Entities will apply the standard’s provisions as a cumulative effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. We have entered into a contract to outsource our current model with a CECL-ready vendor. We are currently evaluating the various methods of determining credit losses within the software. The impact of the adoption is dependent on loan portfolio composition and credit quality at adoption date, as well as economic conditions and forecasts at that time.

From time to time the FASB issues exposure drafts of proposed statements of financial accounting standards. Such exposure drafts are subject to comment from the public, to revisions by the FASB and to final issuance by the FASB as statements of financial accounting standards. Management considers the effect of the proposed statements on the consolidated financial statements of the Company and monitors the status of changes to and proposed effective dates of exposure drafts.

Reclassification

Reclassification

Certain amounts in the 2018 and 2017 financial statements have been reclassified to conform to the 2019 presentation. These reclassifications do not have a material impact on net income or shareholders’ equity.

Available for Sale [Member]

Significant Accounting Policies [Line Items]

Investment Securities

Investment Securities Available for Sale

Investment securities available for sale consist of United States Treasuries, United States Government agencies, Government Sponsored Enterprise (GSE) mortgage backed securities and collateralized mortgage obligations (CMOs), corporate bonds and state and political subdivision bonds. Unrealized holding gains and losses on available for sale securities are reported as a net amount in other comprehensive income, net of income taxes. Gains and losses on the sale of available for sale securities are determined using the specific identification method and recorded on a trade basis. Declines in the fair value of individual available for sale securities below their cost that are other than temporary would result in write-downs of the individual securities, to their fair value. Such write-downs would be included in earnings as realized losses to the extent the losses are associated with the credit quality of the issuer. Amortization of premiums and accretion of discounts are recognized in interest income using the interest method over the period to maturity.

Held to Maturity [Member]

Significant Accounting Policies [Line Items]

Investment Securities

Investment Securities Held to Maturity

Investment securities held to maturity consist of United States Government agencies, corporate bonds and state and political subdivision bonds. The Company has both the intent and ability to hold the securities to maturity. These securities are reported at amortized cost.

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Allowance for Loan Losses

12 Months Ended

Dec. 31, 2019

Receivables [Abstract]

Allowance for Loan Losses

Note 4 - Allowance for Loan Losses

During the second quarter of 2019, the Company transitioned its in-house incurred loss allowance for loan loss model to an external

vendor incurred loss model that is CECL-ready. The overall financial impact related to switching models is considered immaterial. As

a result of the change in models, there has been a change in the methodology for establishing the allowance for loan losses, as

described below.

Default in the allowance for loan loss model is now considered 90 days past due, whereas default was defined as a

charge-off event in the previous model. This increases the probabilities of default for the Company, but reduces the loss given default

ratio in the portfolio.

Probabilities of default are now more representative of the Company’s customers. Previously, an analysis was performed with a sample of North Carolina consumers to calculate the probabilities of default by credit score. In the new model, the Company is able to track probabilities of default based on historical information of loans in the portfolio. This is the largest impact of the model transition, resulting in an immaterial recovery of provision for loan losses.

The qualitative factors used in the model include adjustment to historical rates for the impact of the recession in the last business cycle, current volatility in the market, and management’s analysis of local economic factors and industry-specific outlooks.

Changes in the allowance for loan losses for the years ended December 31, 2019, 2018 and 2017 are presented below (the “other” category represents a one-time impact of re-classification for unfunded commitments’ allowance from the allowance for loan losses to an unfunded commitment liability):

Commercial	2019			2018			2017
	(dollars in thousands)
Balance, beginning of year	$	1,334		$	1,401		$	1,404
Provision (recovery) charged to operations		(571	)		132			(72	)
Charge-offs		(11	)		(245	)		(31	)
Recoveries		367			46			100
Net (charge-offs) recoveries		356			(199	)		69
Other		(32	)		—			—
Balance, end of year	$	1,087		$	1,334		$	1,401

Note 4 - Allowance for Loan Losses (Continued)

Non-Commercial	2019			2018			2017
	(dollars in thousands)
Balance, beginning of year	$	1,040		$	1,057		$	1,303
Provision (recovery) charged to operations		(17	)		(42	)		(164	)
Charge-offs		(149	)		(81	)		(177	)
Recoveries		74			106			95
Net (charge-offs) recoveries		(75	)		25			(82	)
Other		(54	)		—			—
Balance, end of year	$	894		$	1,040		$	1,057

Total	2019			2018			2017
	(dollars in thousands)
Balance, beginning of year	$	2,374		$	2,458		$	2,707
Provision (recovery) charged to operations		(588	)		90			(236	)
Charge-offs		(160	)		(326	)		(208	)
Recoveries		441			152			195
Net (charge-offs) recoveries		281			(174	)		(13	)
Other		(86	)		—			—
Balance, end of year	$	1,981		$	2,374		$	2,458

The following table shows period-end loans and reserve balances by loan segment both individually and collectively evaluated for impairment at December 31, 2019 and 2018:

December 31, 2019	Individually Evaluated				Collectively Evaluated				Total
	Reserve		Loans		Reserve		Loans		Reserve		Loans
	(dollars in thousands)
Commercial	$	32	$	3,660	$	1,055	$	209,456	$	1,087	$	213,116
Non-Commercial		109		3,175		785		141,659		894		144,834
Total	$	141	$	6,835	$	1,840	$	351,115	$	1,981	$	357,950

December 31, 2018	Individually Evaluated				Collectively Evaluated				Total
	Reserve		Loans		Reserve		Loans		Reserve		Loans
	(dollars in thousands)
Commercial	$	42	$	1,359	$	1,292	$	217,592	$	1,334	$	218,951
Non-Commercial		112		3,119		928		147,900		1,040		151,019
Total	$	154	$	4,478	$	2,220	$	365,492	$	2,374	$	369,970

Note 4 - Allowance for Loan Losses (Continued)

Past due loan information is used by management when assessing the adequacy of the allowance for loan losses. The following tables summarize the past due information of the loan portfolio by class:

December 31, 2019	Loans 30-89 Days Past Due		Loans 90 Days or More Past due and Non - Accrual		Total Past Due Loans		Current Loans		Total Loans		Accruing Loans 90 or More Days Past Due
	(dollars in thousands)
Commercial	$	190	$	—	$	190	$	58,885	$	59,075	$	—
Real estate - commercial		—		2,088		2,088		128,910		130,998		—
Other real estate construction		14		0		14		23,029		23,043		—
Real estate construction		—		—		—		7,600		7,600		—
Real estate - residential		326		752		1,078		70,044		71,122		—
Home equity		57		82		139		51,077		51,216		—
Consumer loan		27		—		27		12,930		12,957		—
Other loans		—		—		—		1,939		1,939		—
Total	$	614	$	2,922	$	3,536	$	354,414	$	357,950	$	—

December 31, 2018	Loans 30-89 Days Past Due		Loans 90 Days or More Past due and Non - Accrual		Total Past Due Loans		Current Loans		Total Loans		Accruing Loans 90 or More Days Past Due
	(dollars in thousands)
Commercial	$	54	$	—	$	54	$	57,122	$	57,176	$	—
Real estate - commercial		—		273		273		130,361		130,634		—
Other real estate construction		—		47		47		31,094		31,141		—
Real estate construction		—		—		—		7,805		7,805		—
Real estate - residential		890		606		1,496		74,908		76,404		—
Home equity		100		118		218		52,323		52,541		—
Consumer loan		86		—		86		12,073		12,159		—
Other loans		—		—		—		2,110		2,110		—
Total	$	1,130	$	1,044	$	2,174	$	367,796	$	369,970	$	—

Once a loan becomes 90 days past due, the loan is automatically transferred to a nonaccrual status. The exception to this policy is credit card loans that remain in accrual status 90 days or more until they are paid current or charged off.

Note 4 - Allowance for Loan Losses (Continued)

The composition of nonaccrual loans by class as of December 31, 2019 and 2018 is as follows:

	2019		2018
	(dollars in thousands)
Commercial	$	—	$	—
Real estate - commercial		2,088		273
Other real estate construction		—		47
Real estate 1 – 4 family construction		—		—
Real estate – residential		752		606
Home equity		82		118
Consumer loans		—		—
Other loans		—		—
	$	2,922	$	1,044

Loans that are in nonaccrual status or 90 days past due and still accruing are considered to be nonperforming. Nonperforming loans were $2.9 million at December 31, 2019 and $1.0 million at December 31, 2018.

Management uses a risk-grading program to facilitate the evaluation of probable inherent loan losses and to measure the adequacy of the allowance for loan losses. In this program, risk grades are initially assigned by the loan officers and reviewed and monitored by the lenders and credit administration on an ongoing basis. The program has eight risk grades summarized in five categories as follows:

Pass: Loans that are pass grade credits include loans that are fundamentally sound and risk factors are reasonable and acceptable. They generally conform to policy with only minor exceptions and any major exceptions are clearly mitigated by other economic factors.

Watch: Loans that are watch credits include loans on management’s watch list where a risk concern may be anticipated in the near future.

Substandard: Loans that are considered substandard are loans that are inadequately protected by current sound net worth, paying capacity of the obligor or the value of the collateral pledged. All nonaccrual loans are graded as substandard.

Doubtful: Loans that are considered to be doubtful have all weaknesses inherent in loans classified substandard, plus the added characteristic that the weaknesses make the collection or liquidation in full on the basis of current existing facts, conditions and values highly questionable and improbable.

Loss: Loans that are considered to be a loss are considered to be uncollectible and of such little value that their continuance as bankable assets is not warranted.

The tables below summarize risk grades of the loan portfolio by class as of December 31, 2019 and 2018:

December 31, 2019	Pass		Watch		Sub- standard		Doubtful		Total
	(dollars in thousands)
Commercial	$	56,151	$	2,921	$	3	$	—	$	59,075
Real estate - commercial		126,498		1,194		3,306		—		130,998
Other real estate construction		21,253		1,477		313		—		23,043
Real estate 1 - 4 family construction		7,600		—		—		—		7,600
Real estate - residential		67,647		2,464		1,011		—		71,122
Home equity		50,255		879		82		—		51,216
Consumer loans		12,877		79		1		—		12,957
Other loans		1,939		—		—		—		1,939
Total	$	344,220	$	9,014	$	4,716	$	—	$	357,950

Note 4 - Allowance for Loan Losses (Continued)

December 31, 2018	Pass		Watch		Sub- standard		Doubtful		Total
	(dollars in thousands)
Commercial	$	55,883	$	1,284	$	9	$	—	$	57,176
Real estate - commercial		127,592		1,518		1,524		—		130,634
Other real estate construction		28,711		2,070		360		—		31,141
Real estate 1 - 4 family construction		7,805		—		—		—		7,805
Real estate - residential		69,900		5,470		1,034		—		76,404
Home equity		52,028		395		118		—		52,541
Consumer loans		12,085		73		1		—		12,159
Other loans		2,110		—		—		—		2,110
Total	$	356,114	$	10,810	$	3,046	$	—	$	369,970

The following tables show the breakdown between performing and nonperforming loans by class as of December 31, 2019 and 2018:

December 31, 2019	Performing		Non- Performing		Total
	(dollars in thousands)
Commercial	$	59,075	$	—	$	59,075
Real estate - commercial		128,910		2,088		130,998
Other real estate construction		23,043		—		23,043
Real estate 1 – 4 family construction		7,600		—		7,600
Real estate – residential		70,370		752		71,122
Home equity		51,134		82		51,216
Consumer loans		12,957		—		12,957
Other loans		1,939		—		1,939
Total	$	355,028	$	2,922	$	357,950

December 31, 2018	Performing		Non- Performing		Total
	(dollars in thousands)
Commercial	$	57,176	$	—	$	57,176
Real estate - commercial		130,361		273		130,634
Other real estate construction		31,094		47		31,141
Real estate 1 – 4 family construction		7,805		—		7,805
Real estate – residential		75,798		606		76,404
Home equity		52,423		118		52,541
Consumer loans		12,159		—		12,159
Other loans		2,110		—		2,110
Total	$	368,926	$	1,044	$	369,970

Note 4 - Allowance for Loan Losses (Continued)

Loans are considered impaired when, based on current information and events it is probable the Company will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement. If a loan is deemed impaired, a valuation analysis is performed and a specific reserve is allocated if necessary. The tables below summarize the loans deemed impaired and the amount of specific reserves allocated by class as of December 31, 2019, 2018, and 2017:

	As of  December 31, 2019								Year Ended December 31, 2019
			Recorded		Recorded
	Unpaid		Investment		Investment				Average
	Principal		With No		With		Related		Recorded		Interest
	Balance		Allowance		Allowance		Allowance		Investment		Income
	(dollars in thousands)
Commercial	$	4	$	—	$	4	$	—	$	6	$	—
Real estate - commercial		3,612		1,923		1,689		29		2,273		145
Other real estate construction		44		—		44		3		64		3
Real estate 1 -4 family construction		—		—		—		—		—		—
Real estate - residential		3,070		987		2,083		99		3,010		159
Home equity		82		13		69		10		116		5
Consumer loans		23		—		23		—		27		2
Total	$	6,835	$	2,923	$	3,912	$	141	$	5,496	$	314

									Year Ended
	As of  December 31, 2018								December 31, 2018
			Recorded		Recorded
	Unpaid		Investment		Investment				Average
	Principal		With No		With		Related		Recorded		Interest
	Balance		Allowance		Allowance		Allowance		Investment		Income
	(dollars in thousands)
Commercial	$	7	$	—	$	7	$	—	$	32	$	—
Real estate - commercial		1,258		93		1,165		38		1,503		51
Other real estate construction		632		47		47		4		132		3
Real estate 1 -4 family construction		—		—		—		—		—		—
Real estate - residential		3,005		901		2,104		110		3,505		145
Home equity		83		51		32		1		54		3
Consumer loans		31		—		31		1		40		3
Total	$	5,016	$	1,092	$	3,386	$	154	$	5,266	$	205

									Year Ended
	As of  December 31, 2017								December 31, 2017
			Recorded		Recorded
	Unpaid		Investment		Investment				Average
	Principal		With No		With		Related		Recorded		Interest
	Balance		Allowance		Allowance		Allowance		Investment		Income
	(dollars in thousands)
Commercial	$	44	$	10	$	34	$	10	$	25	$	2
Real estate - commercial		1,593		1,305		288		9		1,650		72
Other real estate construction		689		101		50		3		208		5
Real estate 1 -4 family construction		—		—		—		—		3		—
Real estate - residential		3,701		1,319		2,382		171		3,762		179
Home equity		35		22		13		1		66		1
Consumer loans		45		45		—		—		53		4
Total	$	6,107	$	2,802	$	2,767	$	194	$	5,767	$	263

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Leases

12 Months Ended

Dec. 31, 2019

Lessee Disclosure [Abstract]

Leases

Note 8 – Leases

Our leases relate to three office locations, two of which are branch locations, with remaining terms of two to ten years. Certain lease arrangements contain extension options which range from five to ten years at the then fair market rental rates. As these extension options are not generally considered reasonably certain of exercise, they are not included in the lease term. As of December 31, 2019, operating lease ROU assets were $1.9 million and the lease liability was $2.0 million. The table below depicts information related to the Company’s leases:

	Twelve Months Ended December 31,
	2019
	(in thousands except percent and period data)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	357
ROU assets obtained in exchange for new operating lease liabilities		1,945
Weighted-average remaining lease term - operating leases, in years		7.6
Weighted-average discount rate - operating leases		2.9%

Total rental expense related to the operating leases was $371,327, $339,782, and $155,757 for the years ended December 31, 2019, 2018 and 2017, respectively, and is included in net occupancy expense. A table detailing the lease expense associated with the aforementioned properties is below.

December 31,
(dollars in thousands)
2020	$	381
2021		347
2022		225
2023		229
2024		233
Thereafter		846
Total lease payments		2,261
Less: Interest		(249	)
Present value of lease liabilities	$	2,012

Lease Commitments Disclosure at December 31, 2018 Prior to Adoption of ASU 2016-02

Operating leases for 2018 and 2017 were accounted for under ASC 840, Leases. Total rental expense related to the operating leases was $339,782 and $155,575 for the years ended December 31, 2018 and 2017, respectively, and is included in net occupancy expense. A table detailing the lease expense associated with the aforementioned properties is below.

December 31,
(dollars in thousands)
2019	$	345
2020		345
2021		306
2022		189
2023		189
Thereafter		812
Total		2,186

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Income Tax Matters

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Income Tax Matters

Note 12 - Income Tax Matters

The significant components of income tax expense for the years ended December 31, 2019, 2018 and 2017 are summarized as follows:

	2019			2018			2017
	(dollars in thousands)
Current tax expense:
Federal	$	662		$	524		$	1,022
State		94			94			96
Total		756			618			1,118
Deferred tax expense:
Federal		26			(47	)		680
State		(11	)		8			11
Total		15			(39	)		691
Net provision for income taxes	$	771		$	579		$	1,809

The difference between the provision for income taxes and the amounts computed by applying the statutory federal income tax rate of 21% to income before income taxes is summarized below:

	2019			2018			2017
	(dollars in thousands)
Tax computed at the statutory federal rate	$	810		$	642		$	1,163
Increases (decrease) resulting from:
Tax exempt interest, net		(133	)		(143	)		(238	)
State income taxes, net of federal benefit		65			80			71
Revalue of deferred tax assets		—			—			812
Other		29			—			1
Provision for income taxes	$	771		$	579		$	1,809

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of deferred taxes at December 31, 2019, 2018 and 2017 are as follows:

	2019			2018			2017
	(dollars in thousands)
Deferred tax assets relating to:
Allowance for loan losses	$	478		$	545		$	569
Deferred compensation		1,078			1,012			936
Other		89			104			173
Lease liability		462			—			—
Net unrealized loss on securities available for sale		—			505			335
Total deferred tax assets		2,107			2,166			2,013
Deferred tax liabilities relating to:
Net unrealized gain on securities available for sale		(96	)		—			—
Premises and equipment		(184	)		(159	)		(213	)
Deferred loans fees and costs		(159	)		(163	)		(148	)
Loan servicing		(92	)		(99	)		(116	)
ROU asset		(447	)		—			—
Total deferred tax liabilities		(978	)		(421	)		(477	)
Net recorded deferred tax asset	$	1,129		$	1,745		$	1,536

The net deferred tax asset is included in other assets on the accompanying consolidated balance sheets.

The Tax Cut and Jobs Act, or the Tax Act, was enacted on December 22, 2017. The SEC issued Staff Accounting Bulletin No. 118 to address uncertainty in applying ASC Topic 740 in the reporting period in which the Tax Act was enacted. The Tax Act included a reduction to the corporate income tax rate from 35 percent to 21 percent effective January 1, 2018. Tax expense was increased in the fourth quarter of 2017 by a provisional $806,000 to reflect the Tax Act changes. This increase includes $155,000 tax expense related to the revaluation of the deferred tax asset for items charged to AOCI. The revaluation of deferred tax assets related to items charged to AOCI was a component of 2017 income tax expense and recognized in continuing operations as required by ASC Topic 740.

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Stock Based Compensation

12 Months Ended

Dec. 31, 2019

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock Based Compensation

Note 16 - Stock Based Compensation

During 2006, the Company adopted the 2006 Incentive Stock Option Plan (“SOP II”) and the Employee Stock Purchase Plan (“SPP II”), under which options to purchase shares of the Company’s common stock may be granted to officers and eligible employees. Options granted under the SOP II are exercisable in established increments according to vesting schedules, generally three to five years, and will expire if not exercised within ten years of the date of grant. Options granted under the SPP II are fully vested at the date of grant and expire if not exercised within two years of the grant date. At December 31, 2019, both the SOP II plan and the SPP II plan had expired with no options outstanding.

As of December 31, 2019, there was no unrecognized compensation cost related to non-vested share-based compensation arrangements granted under all of the Company’s stock benefit plans.

There were 13,378 options exercised in 2018 at a weighted average exercise price of $4.93. There were no options exercised in 2019 or 2017.

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Selected Financial Data

12 Months Ended

Dec. 31, 2019

Quarterly Financial Information Disclosure [Abstract]

Selected Financial Data

Selected Financial Data

(dollars in thousands except ratios, per share and shares outstanding information)

	2019			2018			2017			2016			2015
Summary of Operations
Interest income	$	23,767		$	21,873		$	19,340		$	18,046		$	17,847
Interest expense		3,565			1,882			1,277			1,310			1,733
Net interest income		20,202			19,991			18,063			16,736			16,114
Provision for (recovery of) loan losses		(588	)		90			(236	)		(88	)		(620	)
Noninterest income		9,005			8,279			8,425			9,357			7,712
Noninterest expense		25,937			25,124			23,304			23,075			21,633
Income taxes		771			579			1,809			895			806
Net income	$	3,087		$	2,477		$	1,611		$	2,211		$	2,007
Less: Net income attributable to noncontrolling interest		(564	)		(570	)		(592	)		(593	)		(592	)
Less: Dividends on preferred stock	$	—		$	—		$	—		$	—		$	—
Net Income (loss) available to common shareholders	$	2,523		$	1,907		$	1,019		$	1,618		$	1,415
Per Common Share
Net income – basic (1)	$	0.35		$	0.26		$	0.14		$	0.21		$	0.19
Net income (loss) – diluted (1)		0.35			0.26			0.14			0.21			0.19
Book value (1)		5.38			4.75			4.58			4.40			4.33
Weighted Average Shares
Outstanding:
Basic (1)		7,199,262			7,229,333			7,427,036			7,531,360			7,634,024
Diluted (1)		7,199,262			7,229,333			7,427,804			7,531,470			7,634,024
Ratios
Return on average assets		0.48	%		0.40	%		0.28	%		0.41	%		0.38	%
Return on average equity		6.43	%		5.57	%		3.62	%		4.99	%		4.65	%
Average equity to average assets		7.43	%		7.26	%		7.78	%		8.29	%		8.27	%
Selected Year-end Balances
Assets	$	656,793		$	632,304		$	577,253		$	548,230		$	532,202
Loans held for investment		357,950			369,970			356,871			341,829			320,132
Securities		101,952			102,136			107,201			117,889			100,500
Deposits		585,878			566,901			512,628			485,719			467,733
Borrowed funds		10,618			11,164			11,286			12,208			15,305
Shareholders’ equity		48,858			45,175			44,540			43,525			43,314
Selected Average Balances
Assets	$	645,681		$	612,403		$	572,630		$	534,296		$	521,699
Loans held for investment		369,540			369,419			348,980			334,317			316,485
Securities		100,775			103,223			113,025			107,396			112,348
Deposits		575,480			548,296			509,352			470,921			458,655
Borrowed funds		10,956			11,284			11,679			12,898			14,432
Shareholders’ equity		47,993			44,468			44,542			44,283			43,123

(1) Net income per share, book value per share, weighted average shares outstanding and shares outstanding at year-end for years 2018 through 2015 have been adjusted to reflect the 2% stock dividends in 2019, 2018, 2017 and 2016.

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Parent Company Financial Data - Condensed Statements of Cash Flows (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Cash flows from operating activities
Net Income	$ 3,087	$ 2,477	$ 1,611	$ 2,211	$ 2,007
Adjustments to reconcile net income to net cash provided by operating activities:
Net cash provided by operating activities	6,727	3,998	5,753
Increase in other assets	421	(422)	(602)
Increase in other liabilities	(6)	397	1,129
Cash flows from financing activities
Increase (decrease) in long-term debt	9,992	440
Repurchase of common stock, net	(850)	(747)	(391)
Cash paid for fractional shares	(7)	(8)	(6)
Net cash provided by financing activities	17,010	52,891	24,998
Increase in cash and cash equivalents	37,264	47,531	24,435
Cash and cash equivalents, beginning of year	117,934	70,403	45,968
Cash and cash equivalents, end of year	155,198	117,934	70,403	45,968
Number of Common Shares Issued [Member]
Cash flows from operating activities
Net Income	3,087	2,477	1,611
Adjustments to reconcile net income to net cash provided by operating activities:
Net cash provided by operating activities	1,974	473	1,009
Equity in undistributed (earnings) loss of subsidiaries	(1,206)	(2,026)	(745)
Increase in other assets	(435)	(198)	(124)
Increase in other liabilities	528	220	267
Cash flows from financing activities
Decrease in master notes	(564)	(562)	(410)
Decrease in short-term debt			(500)
Increase (decrease) in long-term debt	(440)	440
Net increase in subordinated debentures	458
Net increase in investment in subsidiaries		(250)
Net proceeds from issuance of common stock - stock options		65
Repurchase of common stock, net	(850)	(747)	(391)
Cash paid for fractional shares	(7)	(7)	(7)
Other, net	1
Net cash provided by financing activities	(1,402)	(1,061)	(1,308)
Increase in cash and cash equivalents	572	(588)	(299)
Cash and cash equivalents, beginning of year	1,543	2,131	2,430
Cash and cash equivalents, end of year	$ 2,115	$ 1,543	$ 2,131	$ 2,430

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Fair Values of Financial Instruments and Interest Rate Risk - Assets Re-Measured at Fair Value (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 88,524	$ 91,299
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	5,012	4,955
Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	83,512	86,344
Fair Value on a Nonrecurring Basis [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	3,771	3,279
Other real estate owned	364	951
Fair Value	4,135	4,230
Total liabilities at fair value	0	0
Fair Value on a Nonrecurring Basis [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	0	0
Other real estate owned	0	0
Fair Value	0	0
Total liabilities at fair value	0	0
Fair Value on a Nonrecurring Basis [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	0	0
Other real estate owned	0	0
Fair Value	0	0
Total liabilities at fair value	0	0
Fair Value on a Nonrecurring Basis [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	3,771	3,279
Other real estate owned	364	951
Fair Value	4,135	4,230
Total liabilities at fair value	$ 0	$ 0

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Allowance for Loan Losses - Past Due Information of Loan Portfolio by Class (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Financing Receivable Impaired [Line Items]
Total Past Due Loans	$ 3,536	$ 2,174
Current Loans	354,414	367,796
Total Loans	357,950	369,970	$ 356,871	$ 341,829	$ 320,132
Accruing Loans 90 or More Days Past Due	0	0
Loans 30-89 Days Past Due [Member]
Financing Receivable Impaired [Line Items]
Total Past Due Loans	614	1,130
Loans 90 Days or More Past Due and Non - Accrual [Member]
Financing Receivable Impaired [Line Items]
Total Past Due Loans	2,922	1,044
Real Estate - Commercial [Member]
Financing Receivable Impaired [Line Items]
Total Past Due Loans	2,088	273
Current Loans	128,910	130,361
Total Loans	130,998	130,634
Accruing Loans 90 or More Days Past Due	0	0
Real Estate - Commercial [Member] | Loans 90 Days or More Past Due and Non - Accrual [Member]
Financing Receivable Impaired [Line Items]
Total Past Due Loans	2,088	273
Other Real Estate Construction [Member]
Financing Receivable Impaired [Line Items]
Total Past Due Loans	14	47
Current Loans	23,029	31,094
Total Loans	23,043	31,141
Accruing Loans 90 or More Days Past Due	0	0
Other Real Estate Construction [Member] | Loans 30-89 Days Past Due [Member]
Financing Receivable Impaired [Line Items]
Total Past Due Loans	14
Other Real Estate Construction [Member] | Loans 90 Days or More Past Due and Non - Accrual [Member]
Financing Receivable Impaired [Line Items]
Total Past Due Loans	0	47
Real Estate Construction [Member]
Financing Receivable Impaired [Line Items]
Current Loans	7,600	7,805
Total Loans	7,600	7,805
Accruing Loans 90 or More Days Past Due	0	0
Real Estate - Residential [Member]
Financing Receivable Impaired [Line Items]
Total Past Due Loans	1,078	1,496
Current Loans	70,044	74,908
Total Loans	71,122	76,404
Accruing Loans 90 or More Days Past Due	0	0
Real Estate - Residential [Member] | Loans 30-89 Days Past Due [Member]
Financing Receivable Impaired [Line Items]
Total Past Due Loans	326	890
Real Estate - Residential [Member] | Loans 90 Days or More Past Due and Non - Accrual [Member]
Financing Receivable Impaired [Line Items]
Total Past Due Loans	752	606
Home Equity [Member]
Financing Receivable Impaired [Line Items]
Total Past Due Loans	139	218
Current Loans	51,077	52,323
Total Loans	51,216	52,541
Accruing Loans 90 or More Days Past Due	0	0
Home Equity [Member] | Loans 30-89 Days Past Due [Member]
Financing Receivable Impaired [Line Items]
Total Past Due Loans	57	100
Home Equity [Member] | Loans 90 Days or More Past Due and Non - Accrual [Member]
Financing Receivable Impaired [Line Items]
Total Past Due Loans	82	118
Other Loans [Member]
Financing Receivable Impaired [Line Items]
Current Loans	1,939	2,110
Total Loans	1,939	2,110
Accruing Loans 90 or More Days Past Due	0	0
Commercial Loan [Member]
Financing Receivable Impaired [Line Items]
Total Past Due Loans	190	54
Current Loans	58,885	57,122
Total Loans	59,075	57,176
Accruing Loans 90 or More Days Past Due	0	0
Commercial Loan [Member] | Loans 30-89 Days Past Due [Member]
Financing Receivable Impaired [Line Items]
Total Past Due Loans	190	54
Consumer Loans [Member]
Financing Receivable Impaired [Line Items]
Total Past Due Loans	27	86
Current Loans	12,930	12,073
Total Loans	12,957	12,159
Accruing Loans 90 or More Days Past Due	0	0
Consumer Loans [Member] | Loans 30-89 Days Past Due [Member]
Financing Receivable Impaired [Line Items]
Total Past Due Loans	$ 27	$ 86

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Related Party Transactions - Summary of Loans to Directors, Executive Officers and Their Related Interests (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Related Party Transactions [Abstract]
Balance, at beginning of the year	$ 9,284	$ 8,692
Disbursements during the year	4,833	1,902
Collections during the year	(3,822)	(1,310)
Balance, at end of the year	$ 10,295	$ 9,284

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Stock Based Compensation - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost	$ 0
Options exercised, Shares	0	13,378	0
Options exercised, Weighted Average Exercise Price		$ 4.93
2006 Incentive Stock Option Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation arrangement by share based payment award, expiration period	10 years
Number of options outstanding	0
Employee Stock Purchase Plan II [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation arrangement by share based payment award, expiration period	2 years
Number of options outstanding	0
Minimum [Member] | 2006 Incentive Stock Option Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
SOP vesting schedules	3 years
Maximum [Member] | 2006 Incentive Stock Option Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
SOP vesting schedules	5 years

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Allowance for Loan Losses - Summary of Performing and Nonperforming Loans by Class (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Financing Receivable Recorded Investment [Line Items]
Loans	$ 357,950	$ 369,970	$ 356,871	$ 341,829	$ 320,132
Real Estate - Commercial [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	130,998	130,634
Other Real Estate Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	23,043	31,141
Real Estate 1 - 4 Family Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	7,600	7,805
Real Estate - Residential [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	71,122	76,404
Home Equity [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	51,216	52,541
Other Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	1,939	2,110
Commercial Loan [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	59,075	57,176
Consumer Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	12,957	12,159
Performing [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	355,028	368,926
Performing [Member] | Real Estate - Commercial [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	128,910	130,361
Performing [Member] | Other Real Estate Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	23,043	31,094
Performing [Member] | Real Estate 1 - 4 Family Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	7,600	7,805
Performing [Member] | Real Estate - Residential [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	70,370	75,798
Performing [Member] | Home Equity [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	51,134	52,423
Performing [Member] | Other Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	1,939	2,110
Performing [Member] | Commercial Loan [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	59,075	57,176
Performing [Member] | Consumer Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	12,957	12,159
Non-Performing [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	2,922	1,044
Non-Performing [Member] | Real Estate - Commercial [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	2,088	273
Non-Performing [Member] | Other Real Estate Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Loans		47
Non-Performing [Member] | Real Estate - Residential [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	752	606
Non-Performing [Member] | Home Equity [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	$ 82	$ 118

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Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Statement Of Income And Comprehensive Income [Abstract]
Net Income	$ 3,087	$ 2,477	$ 1,611
Other comprehensive income (loss):
Unrealized gains (losses) on available for sale securities	2,584	(758)	696
Related tax effect	(595)	171	(340)
Reclassification of losses recognized in net income	35	0	14
Related tax effect	(7)	0	(4)
Total other comprehensive income (loss)	2,017	(587)	366
Comprehensive income	5,104	1,890	1,977
Less: Comprehensive income attributable to noncontrolling interest	(564)	(570)	(592)
Comprehensive income attributable to Uwharrie Capital Corp	$ 4,540	$ 1,320	$ 1,385

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Selected Financial Data (Table)

12 Months Ended

Dec. 31, 2019

Quarterly Financial Information Disclosure [Abstract]

Summary of Quarterly Financial Information

	2019			2018			2017			2016			2015
Summary of Operations
Interest income	$	23,767		$	21,873		$	19,340		$	18,046		$	17,847
Interest expense		3,565			1,882			1,277			1,310			1,733
Net interest income		20,202			19,991			18,063			16,736			16,114
Provision for (recovery of) loan losses		(588	)		90			(236	)		(88	)		(620	)
Noninterest income		9,005			8,279			8,425			9,357			7,712
Noninterest expense		25,937			25,124			23,304			23,075			21,633
Income taxes		771			579			1,809			895			806
Net income	$	3,087		$	2,477		$	1,611		$	2,211		$	2,007
Less: Net income attributable to noncontrolling interest		(564	)		(570	)		(592	)		(593	)		(592	)
Less: Dividends on preferred stock	$	—		$	—		$	—		$	—		$	—
Net Income (loss) available to common shareholders	$	2,523		$	1,907		$	1,019		$	1,618		$	1,415
Per Common Share
Net income – basic (1)	$	0.35		$	0.26		$	0.14		$	0.21		$	0.19
Net income (loss) – diluted (1)		0.35			0.26			0.14			0.21			0.19
Book value (1)		5.38			4.75			4.58			4.40			4.33
Weighted Average Shares
Outstanding:
Basic (1)		7,199,262			7,229,333			7,427,036			7,531,360			7,634,024
Diluted (1)		7,199,262			7,229,333			7,427,804			7,531,470			7,634,024
Ratios
Return on average assets		0.48	%		0.40	%		0.28	%		0.41	%		0.38	%
Return on average equity		6.43	%		5.57	%		3.62	%		4.99	%		4.65	%
Average equity to average assets		7.43	%		7.26	%		7.78	%		8.29	%		8.27	%
Selected Year-end Balances
Assets	$	656,793		$	632,304		$	577,253		$	548,230		$	532,202
Loans held for investment		357,950			369,970			356,871			341,829			320,132
Securities		101,952			102,136			107,201			117,889			100,500
Deposits		585,878			566,901			512,628			485,719			467,733
Borrowed funds		10,618			11,164			11,286			12,208			15,305
Shareholders’ equity		48,858			45,175			44,540			43,525			43,314
Selected Average Balances
Assets	$	645,681		$	612,403		$	572,630		$	534,296		$	521,699
Loans held for investment		369,540			369,419			348,980			334,317			316,485
Securities		100,775			103,223			113,025			107,396			112,348
Deposits		575,480			548,296			509,352			470,921			458,655
Borrowed funds		10,956			11,284			11,679			12,898			14,432
Shareholders’ equity		47,993			44,468			44,542			44,283			43,123

(1) Net income per share, book value per share, weighted average shares outstanding and shares outstanding at year-end for years 2018 through 2015 have been adjusted to reflect the 2% stock dividends in 2019, 2018, 2017 and 2016.

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Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
ASSETS
Cash and due from banks	$ 7,520	$ 4,473
Interest-earning deposits with banks	147,678	113,461
Securities available for sale, at fair value	88,524	91,299
Securities held to maturity (fair value $13,499 and $10,750, respectively)	13,428	10,837
Loans held for sale	2,946	4,800
Loans:
Loans held for investment	357,950	369,970
Less allowance for loan losses	(1,981)	(2,374)
Net loans held for investment	355,969	367,596
Premises and equipment, net	17,062	14,800
Interest receivable	1,666	1,763
Restricted stock	1,144	1,094
Bank owned life insurance	8,796	8,671
Other real estate owned	494	1,047
Prepaid assets	714	558
Other assets	10,852	11,905
Total assets	656,793	632,304
Deposits:
Demand noninterest-bearing	150,283	129,714
Interest checking and money market accounts	263,136	324,391
Savings deposits	57,136	54,784
Time deposits, $250,000 and over	55,682	7,920
Other time deposits	59,641	50,092
Total deposits	585,878	566,901
Short-term borrowed funds	626	1,190
Long-term debt	9,992	9,974
Interest payable	55	16
Other liabilities	11,384	9,048
Total liabilities	607,935	587,129
Off balance sheet items, commitments and contingencies (Note 13)
SHAREHOLDERS’ EQUITY
Common stock, $1.25 par value: 20,000,000 shares authorized; shares issued and outstanding 7,095,920 and 7,126,541, respectively	8,870	8,908
Additional paid-in capital	12,784	12,885
Undivided profits	16,226	14,421
Accumulated other comprehensive income (loss)	323	(1,694)
Total Uwharrie Capital shareholders’ equity	38,203	34,520
Noncontrolling interest	10,655	10,655
Total shareholders’ equity	48,858	45,175
Total liabilities and shareholders’ equity	$ 656,793	$ 632,304

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Related Party Transactions (Tables)

12 Months Ended

Dec. 31, 2019

Related Party Transactions [Abstract]

Summary of Loans to Directors, Executive Officers and Their Related Interests

A summary of loans to directors, executive officers and their related interests follows:

	2019			2018
	(dollars in thousands)
Balance, at beginning of the year	$	9,284		$	8,692
Disbursements during the year		4,833			1,902
Collections during the year		(3,822	)		(1,310	)
Balance, at end of the year	$	10,295		$	9,284

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Short-Term Borrowed Funds (Tables)

12 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

Summary of Short-Term Borrowed Funds

The following tables set forth certain information regarding the amounts, year-end weighted average rates, average balances, weighted average rate, and maximum month-end balances for short-term borrowed funds, at and during 2019 and 2018:

	2019					2018
	Amount		Rate			Amount		Rate
	(dollars in thousands)
At year-end
Master notes and other short-term borrowing	$	626		0.89	%	$	1,190		1.49	%
Notes payable		—		—			—		—
Short-term line of credit		—		—			—		—
	$	626		0.89	%	$	1,190		1.49	%

	2019					2018
	Amount		Rate			Amount		Rate
	(dollars in thousands)
Average for the year
Federal funds purchased	$	2		3.04	%	$	2		2.92	%
Master notes and other short-term borrowing		904		1.61	%		1,638		1.00	%
Notes payable		—		—			—		—
Short-term line of credit		—		—			—		—
	$	906		1.62	%	$	1,640		1.00	%

	2019		2018
	(dollars in thousands)
Maximum month-end balance
Federal funds purchased		—		—
Master notes and other short-term borrowing		1,486		2,006

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Parent Company Financial Data

12 Months Ended

Dec. 31, 2019

Condensed Financial Information Of Parent Company Only Disclosure [Abstract]

Parent Company Financial Data

Note 19 - Parent Company Financial Data

The following is a summary of the condensed financial statements of Uwharrie Capital Corp:

Condensed Balance Sheets

	December 31,
	2019		2018
	(dollars in thousands)
Assets
Cash and demand deposits	$	526	$	287
Interest-earning deposits		1,589		1,256
Investments in:
Bank subsidiaries		45,770		43,042
Nonbank subsidiaries		381		450
Other assets		2,073		1,638
Total assets	$	50,339	$	46,673
Liabilities and shareholders’ equity
Master notes	$	626	$	1,190
Short term debt		—		—
Long term debt		9,992		9,974
Other liabilities		1,518		989
Total liabilities		12,136		12,153
Shareholders’ equity		38,203		34,520
Total liabilities and shareholders’ equity	$	50,339	$	46,673

Note 19 - Parent Company Financial Data (Continued)

Condensed Statements of Income

	2019			2018			2017
	(dollars in thousands)
Equity in undistributed earnings (loss) of subsidiaries	$	1,206		$	2,026		$	745
Dividends received from subsidiaries		2,750			1,150			1,500
Interest income		15			17			6
Other income		41			80			93
Interest expense		(577	)		(571	)		(564	)
Other operating expense		(578	)		(410	)		(436	)
Income tax benefit		230			185			267
Net income	$	3,087		$	2,477		$	1,611
Consolidated net income	$	3,087		$	2,477		$	1,611
Less: Net income attributable to noncontrolling interest		(564	)		(570	)		(592	)
Net income attributable to Uwharrie Capital Corp		2,523			1,907			1,019
Net income available to common shareholders	$	2,523		$	1,907		$	1,019
Net income per common share
Basic	$	0.36		$	0.26		$	0.14
Diluted	$	0.36		$	0.26		$	0.14
Weighted average shares outstanding
Basic		7,066,880			7,229,333			7,427,036
Diluted		7,066,880			7,229,333			7,427,804

Condensed Statements of Cash Flows

	2019			2018			2017
	(dollars in thousands)
Cash flows from operating activities
Net income	$	3,087		$	2,477		$	1,611
Adjustments to reconcile net income to net cash provided by operating    activities:
Equity in undistributed (earnings) loss of subsidiaries		(1,206	)		(2,026	)		(745	)
Increase in other assets		(435	)		(198	)		(124	)
Increase in other liabilities		528			220			267
Net cash provided by operating activities		1,974			473			1,009
Cash flows from financing activities
Decrease in master notes		(564	)		(562	)		(410	)
Decrease in short-term debt		—			—			(500	)
Increase (decrease) in long-term debt		(440	)		440			—
Net increase in subordinated debentures		458			—			—
Net increase in investment in subsidiaries		—			(250	)		—
Net proceeds from issuance of common stock - stock options		—			65			—
Repurchase of common stock, net		(850	)		(747	)		(391	)
Cash paid for fractional shares		(7	)		(7	)		(7	)
Other, net		1			—			—
Net cash used by financing activities		(1,402	)		(1,061	)		(1,308	)
Net decrease in cash and cash equivalents		572			(588	)		(299	)
Cash and cash equivalents at beginning of year		1,543			2,131			2,430
Cash and cash equivalents at end of year	$	2,115		$	1,543		$	2,131

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Long-Term Debt

12 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

Long-Term Debt

Note 11 - Long-Term Debt

The Company has a line of credit with the Federal Home Loan Bank secured by qualifying first lien and second mortgage loans and commercial real estate loans with eligible collateral value of $98.0 million with remaining availability of $56.0 million at December 31, 2019. There were no long-term advances under this line at December 31, 2019 or at December 31, 2018. The subsidiary bank also has standby letters of credit issued by the Federal Home Loan Bank to be used as collateral for public funds deposits. The aggregate amount of the letters of credit was $42.0 million at December 31, 2019.

During the third quarter of 2019, the Company conducted a private placement offering of fixed rate junior subordinated debt securities at $1,000 per security with a required minimum investment of $50,000. The offering raised $10.0 million, of which the entire $10.0 million was outstanding at December 31, 2019. These securities have a final maturity date of September 30, 2029 and may be redeemed by the Company after September 30, 2024. The junior subordinated debt pays interest quarterly at an annual fixed rate of 5.25%. All proceeds of this private placement qualify and are included in the calculation of Tier 2 capital. Once the final maturity drops under five years, the Company must impose a twenty percent annual reduction per year of the amount of the proceeds from the sale of these securities that are eligible to be counted as Tier 2 capital. The Company will have a twenty percent reduction beginning at September 30, 2024.

As of December 31, 2019, the scheduled maturities of these long-term borrowings are as follows:

Year ending December 31,
(dollars in thousands)
2020	$	—
2021		—
2022		—
2023		—
2024		—
Thereafter		9,992
Total	$	9,992

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Shareholders' Equity and Regulatory Matters

12 Months Ended

Dec. 31, 2019

Equity [Abstract]

Shareholders' Equity and Regulatory Matters

Note 15 – Shareholders’ Equity and Regulatory Matters

The Company and its banking subsidiary are subject to certain requirements imposed by state and federal banking statutes and regulations. These requirements, among other things, establish minimum levels of capital, restrict the amount of dividends that may be distributed, and require that reserves on deposit liabilities be maintained in the form of vault cash or deposits with the Federal Reserve Bank.

For the reserve maintenance period in effect at December 31, 2019, the subsidiary bank was required to maintain reserve balances in cash or on deposit with the Federal Reserve Bank in the aggregate amount of $4.9 million as reserves on deposit liabilities.

The Company and its subsidiary bank are subject to federal regulatory risk-based capital guidelines for banks and bank holding companies. Each must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices which measure Total Capital, Tier 1 Capital and Common Equity Tier 1 Capital to risk-weighted assets and Tier 1 Capital to average assets.

In 2013, bank regulatory agencies approved regulatory capital guidelines (“Basel III”) aimed at strengthening existing capital requirements for banking organizations. The rules include a common equity Tier 1 capital to risk-weighted assets minimum ratio of 4.50%, a minimum ratio of Tier 1 capital to risk-weighted assets of 6.00%, require a minimum ratio of total capital to risk-weighted assets of 8.00%, and require a minimum Tier 1 leverage ratio of 4.00%. A capital conservation buffer, comprised of common equity Tier 1 capital, was also established above the regulatory minimum capital requirements. This capital conservation buffer will be phased in beginning January 1, 2016 at 0.625% of risk-weighted assets and increase each subsequent year by an additional 0.625% until reaching its final level of 2.50% on January 1, 2019. Strict eligibility criteria for regulatory capital instruments were also implemented under the rules. The rules also revise the definition and calculation of Tier 1 capital, total capital, and risk-weighted assets.

The phase-in period for the rules became effective for the Company and its subsidiary bank on January 1, 2015, with full compliance of all the rules’ requirements phased in over a multi-year schedule, becoming fully phased-in on January 1, 2019. As of December 31, 2019, the Company and its subsidiary bank continue to exceed minimum capital standards and remain well-capitalized under the capital adequacy rules.

Quantitative measures established by regulation to ensure capital adequacy and the Company’s consolidated capital ratios are set forth in the table below. The Company expects to meet or exceed these minimums without altering current operations or strategy.

											Minimum to Be Well
						Minimum					Capitalized Under
						For Capital					Prompt Corrective
	Actual					Requirement					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
December 31, 2019
Total Capital to Risk
Weighted Assets:
Consolidated	$	60,509		14.1	%	$	34,387		8.0	%	$	42,984		10.0	%
Uwharrie Bank		58,082		13.6	%		34,098		8.0	%		42,622		10.0	%
Tier 1 Capital to Risk
Weighted Assets:
Consolidated		48,536		11.3	%		25,790		6.0	%		34,387		8.0	%
Uwharrie Bank		56,101		13.2	%		25,573		6.0	%		34,098		8.0	%
Common Equity Tier 1 Capital to Risk Weighted    Assets:
Consolidated		37,881		8.8	%		19,343		4.5	%		27,940		6.5	%
Uwharrie Bank		45,446		10.7	%		19,180		4.5	%		27,704		6.5	%
Tier 1 Capital to
Average Assets:
Consolidated		48,536		7.4	%		26,336		4.0	%		32,920		5.0	%
Uwharrie Bank		56,101		8.5	%		26,249		4.0	%		32,812		5.0	%

Note 15 – Shareholders’ Equity and Regulatory Matters (Continued)

											Minimum to Be Well
						Minimum					Capitalized Under
						For Capital					Prompt Corrective
	Actual					Requirement					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
December 31, 2018
Total Capital to Risk
Weighted Assets:
Consolidated	$	58,777		14.0	%	$	33,660		8.0	%	$	42,076		10.0	%
Uwharrie Bank		57,765		13.8	%		33,460		8.0	%		41,826		10.0	%
Tier 1 Capital to Risk
Weighted Assets:
Consolidated		46,869		11.1	%		25,245		6.0	%		33,660		8.0	%
Uwharrie Bank		55,391		13.2	%		25,095		6.0	%		33,460		8.0	%
Common Equity Tier 1 Capital to Risk Weighted    Assets:
Consolidated		36,214		8.6	%		18,934		4.5	%		27,349		6.5	%
Uwharrie Bank		44,736		10.7	%		18,821		4.5	%		27,187		6.5	%
Tier 1 Capital to
Average Assets:
Consolidated		46,869		7.4	%		25,347		4.0	%		31,683		5.0	%
Uwharrie Bank		55,391		8.8	%		25,254		4.0	%		31,567		5.0	%

As of December 31, 2019, the most recent notification from the Federal Deposit Insurance Corporation categorized the Company’s subsidiary bank as being well capitalized under the regulatory framework for prompt corrective action. There have been no conditions or events since such notification that management believes would have changed the categorization.

In January 2013, the Company’s subsidiary bank issued $7.9 million of Fixed Rate Noncumulative Perpetual Preferred Stock, Series B. The preferred stock qualifies as Tier 1 capital at the subsidiary bank and pays dividends at a rate of 5.30%. The offering raised $7.9 million less issuance costs of $113,000.

During 2013, the Company’s subsidiary 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. The offering raised $2.8 million in new capital less total issuance costs of $23,000.

The total net amount of capital raised from Fixed Rate Noncumulative Perpetual Preferred Stock, Series B and Series C issued at the subsidiary bank level is presented as noncontrolling interest in the consolidated balance sheets.

During the third quarter of 2019, the Company conducted a private placement offering of fixed rate junior subordinated debt securities at $1,000 per security with a required minimum investment of $50,000. The offering raised $10.0 million, of which the entire $10.0 million was outstanding at December 31, 2019. These securities have a final maturity date of September 30, 2029 and may be redeemed by the Company after September 30, 2024. The junior subordinated debt pays interest quarterly at an annual fixed rate of 5.25%. All proceeds of this private placement qualify and are included in the calculation of Tier 2 capital. Once the final maturity drops under five years, the Company must impose a twenty percent annual reduction per year of the amount of the proceeds from the sale of these securities that are eligible to be counted as Tier 2 capital. The Company will have a twenty percent reduction beginning at September 30, 2024.

All of the Company’s aforementioned investment in its subsidiary bank qualifies for Tier 1 capital treatment for the bank and is included as such in its year end capital ratios.

Note 15 – Shareholders’ Equity and Regulatory Matters (Continued)

Stock Repurchase Program

On February 21, 1995, the Company’s Board of Directors authorized and approved a Stock Repurchase Program, to be reaffirmed annually, pursuant to which the Company may repurchase shares of the Company’s common stock for the primary purpose of providing liquidity to its shareholders. During 2019, the Company repurchased 168,683 shares of outstanding common stock and repurchased 138,629 and 75,709 shares of outstanding common stock during 2018 and 2017, respectively.

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Parent Company Financial Data - Condensed Statements of Income (Detail) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Condensed Income Statements, Captions [Line Items]
Other income	$ 344	$ 810	$ 595
Interest expense	(3,565)	(1,882)	(1,277)	$ (1,310)	$ (1,733)
Other operating expense	(1,869)	(1,917)	(2,009)
Income tax benefit	(771)	(579)	(1,809)	(895)	(806)
Net income	3,087	2,477	1,611	2,211	2,007
Consolidated net income	3,087	2,477	1,611	2,211	2,007
Less: Net income attributable to noncontrolling interest	(564)	(570)	(592)	(593)	(592)
Net income available to common shareholders	$ 2,523	$ 1,907	$ 1,019	$ 1,618	$ 1,415
Net income per common share
Basic	$ 0.35	$ 0.26	$ 0.14	$ 0.21	$ 0.19
Diluted	$ 0.35	$ 0.26	$ 0.14	$ 0.21	$ 0.19
Weighted average common shares outstanding
Basic	7,199,262	7,229,333	7,427,036	7,531,360	7,634,024
Diluted	7,199,262	7,229,333	7,427,804	7,531,470	7,634,024
Number of Common Shares Issued [Member]
Condensed Income Statements, Captions [Line Items]
Equity in undistributed earnings (loss) of subsidiaries	$ 1,206	$ 2,026	$ 745
Dividends received from subsidiaries	2,750	1,150	1,500
Interest income	15	17	6
Other income	41	80	93
Interest expense	(577)	(571)	(564)
Other operating expense	(578)	(410)	(436)
Income tax benefit	230	185	267
Net income	3,087	2,477	1,611
Consolidated net income	3,087	2,477	1,611
Less: Net income attributable to noncontrolling interest	(564)	(570)	(592)
Net income attributable to Uwharrie Capital Corp	2,523	1,907	1,019
Net income available to common shareholders	$ 2,523	$ 1,907	$ 1,019
Net income per common share
Basic	$ 0.36	$ 0.26	$ 0.14
Diluted	$ 0.36	$ 0.26	$ 0.14
Weighted average common shares outstanding
Basic	7,066,880	7,229,333	7,427,036
Diluted	7,066,880	7,229,333	7,427,804

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Fair Values of Financial Instruments and Interest Rate Risk - Fair Value Information for Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	$ 88,524	$ 91,299
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	5,012	4,955
Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	83,512	86,344
Corporate Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	5,029	4,771
Fair Value on a Recurring Basis [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	88,524	91,299
Total liabilities at fair value	0	0
Fair Value on a Recurring Basis [Member] | U.S. Treasury [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	5,012	4,955
Fair Value on a Recurring Basis [Member] | U.S. Government Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	25,686	51,916
Fair Value on a Recurring Basis [Member] | GSE - Mortgage-backed Securities and CMO's [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	38,576	16,702
Fair Value on a Recurring Basis [Member] | State and Political Subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	14,221	12,955
Fair Value on a Recurring Basis [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	5,012	4,955
Total liabilities at fair value	0	0
Fair Value on a Recurring Basis [Member] | Level 1 [Member] | U.S. Treasury [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	5,012	4,955
Fair Value on a Recurring Basis [Member] | Level 1 [Member] | U.S. Government Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	0	0
Fair Value on a Recurring Basis [Member] | Level 1 [Member] | GSE - Mortgage-backed Securities and CMO's [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	0	0
Fair Value on a Recurring Basis [Member] | Level 1 [Member] | State and Political Subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	0	0
Fair Value on a Recurring Basis [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	83,512	86,344
Total liabilities at fair value	0	0
Fair Value on a Recurring Basis [Member] | Level 2 [Member] | U.S. Treasury [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	0	0
Fair Value on a Recurring Basis [Member] | Level 2 [Member] | U.S. Government Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	25,686	51,916
Fair Value on a Recurring Basis [Member] | Level 2 [Member] | GSE - Mortgage-backed Securities and CMO's [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	38,576	16,702
Fair Value on a Recurring Basis [Member] | Level 2 [Member] | State and Political Subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	14,221	12,955
Fair Value on a Recurring Basis [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	0	0
Total liabilities at fair value	0	0
Fair Value on a Recurring Basis [Member] | Level 3 [Member] | U.S. Treasury [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	0	0
Fair Value on a Recurring Basis [Member] | Level 3 [Member] | U.S. Government Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	0	0
Fair Value on a Recurring Basis [Member] | Level 3 [Member] | GSE - Mortgage-backed Securities and CMO's [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	0	0
Fair Value on a Recurring Basis [Member] | Level 3 [Member] | State and Political Subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	0	0
Fair Value on a Recurring Basis [Member] | Corporate Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	5,029	4,771
Fair Value on a Recurring Basis [Member] | Corporate Bonds [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	0	0
Fair Value on a Recurring Basis [Member] | Corporate Bonds [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	5,029	4,771
Fair Value on a Recurring Basis [Member] | Corporate Bonds [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	$ 0	$ 0

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Allowance for Loan Losses - Schedule of Loans and Reserve Balances by Loan Segment Both Individually and Collectively Evaluated for Impairment (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Financing Receivable Allowance For Credit Losses [Line Items]
Individually Evaluated, Reserve	$ 141	$ 154
Individually Evaluated, Loans	6,835	4,478
Collectively Evaluated, Reserve	1,840	2,220
Collectively Evaluated, Loans	351,115	365,492
Total Reserve	1,981	2,374	$ 2,458	$ 2,707
Total Loans	357,950	369,970	356,871	341,829	$ 320,132
Commercial [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Individually Evaluated, Reserve	32	42
Individually Evaluated, Loans	3,660	1,359
Collectively Evaluated, Reserve	1,055	1,292
Collectively Evaluated, Loans	209,456	217,592
Total Reserve	1,087	1,334	1,401	1,404
Total Loans	213,116	218,951
Non-Commercial [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Individually Evaluated, Reserve	109	112
Individually Evaluated, Loans	3,175	3,119
Collectively Evaluated, Reserve	785	928
Collectively Evaluated, Loans	141,659	147,900
Total Reserve	894	1,040	$ 1,057	$ 1,303
Total Loans	$ 144,834	$ 151,019

XML

Commitments and Contingencies - Outstanding Financial Instruments Whose Contract Amounts Represent Credit Risk (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Loss Contingencies [Line Items]
Total commitments	$ 147,104	$ 121,873
Commitments to Extend Credit [Member]
Loss Contingencies [Line Items]
Total commitments	134,241	110,329
Credit Card Commitments [Member]
Loss Contingencies [Line Items]
Total commitments	11,650	10,611
Standby Letters of Credit [Member]
Loss Contingencies [Line Items]
Total commitments	$ 1,213	$ 933

XML

Shareholders' Equity and Regulatory Matters - Company's Consolidated Capital Ratios (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Consolidated [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total Capital to Risk Weighted Assets, Actual (Amount)	$ 60,509	$ 58,777
Total Capital to Risk Weighted Assets, Actual (Ratio)	14.10%	14.00%
Total Capital to Risk Weighted Assets, Minimum For Capital Requirement (Amount)	$ 34,387	$ 33,660
Total Capital to Risk Weighted Assets, Minimum For Capital Requirement (Ratio)	8.00%	8.00%
Total Capital to Risk Weighted Assets, Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions (Amount)	$ 42,984	$ 42,076
Total Capital to Risk Weighted Assets, Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions (Ratio)	10.00%	10.00%
Tier 1 Capital to Risk Weighted Assets, Actual (Amount)	$ 48,536	$ 46,869
Tier 1 Capital to Risk Weighted Assets, Actual (Ratio)	11.30%	11.10%
Tier 1 Capital to Risk Weighted Assets, Minimum For Capital Requirement (Amount)	$ 25,790	$ 25,245
Tier 1 Capital to Risk Weighted Assets, Minimum For Capital Requirement (Ratio)	6.00%	6.00%
Tier 1 Capital to Risk Weighted Assets, Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions (Amount)	$ 34,387	$ 33,660
Tier 1 Capital to Risk Weighted Assets, Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions (Ratio)	8.00%	8.00%
Common Equity Tier 1 Capital to Risk Weighted Assets, Actual (Amount)	$ 37,881	$ 36,214
Common Equity Tier 1 Capital to Risk Weighted Assets, Actual (Ratio)	8.80%	8.60%
Common Equity Tier 1 Capital to Risk Weighted Assets, Minimum For Capital Requirement (Amount)	$ 19,343	$ 18,934
Common Equity Tier 1 Capital to Risk Weighted Assets, Minimum For Capital Requirement (Ratio)	4.50%	4.50%
Common Equity Tier 1 Capital to Risk Weighted Assets, Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions (Amount)	$ 27,940	$ 27,349
Common Equity Tier 1 Capital to Risk Weighted Assets, Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions (Ratio)	6.50%	6.50%
Tier 1 Capital to Average Assets, Actual (Amount)	$ 48,536	$ 46,869
Tier 1 Capital to Average Assets, Actual (Ratio)	7.40%	7.40%
Tier 1 Capital to Average Assets, Minimum For Capital Requirement (Amount)	$ 26,336	$ 25,347
Tier 1 Capital to Average Assets, Minimum For Capital Requirement (Ratio)	4.00%	4.00%
Tier 1 Capital to Average Assets, Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions (Amount)	$ 32,920	$ 31,683
Tier 1 Capital to Average Assets, Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions (Ratio)	5.00%	5.00%
Uwharrie Bank [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total Capital to Risk Weighted Assets, Actual (Amount)	$ 58,082	$ 57,765
Total Capital to Risk Weighted Assets, Actual (Ratio)	13.60%	13.80%
Total Capital to Risk Weighted Assets, Minimum For Capital Requirement (Amount)	$ 34,098	$ 33,460
Total Capital to Risk Weighted Assets, Minimum For Capital Requirement (Ratio)	8.00%	8.00%
Total Capital to Risk Weighted Assets, Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions (Amount)	$ 42,622	$ 41,826
Total Capital to Risk Weighted Assets, Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions (Ratio)	10.00%	10.00%
Tier 1 Capital to Risk Weighted Assets, Actual (Amount)	$ 56,101	$ 55,391
Tier 1 Capital to Risk Weighted Assets, Actual (Ratio)	13.20%	13.20%
Tier 1 Capital to Risk Weighted Assets, Minimum For Capital Requirement (Amount)	$ 25,573	$ 25,095
Tier 1 Capital to Risk Weighted Assets, Minimum For Capital Requirement (Ratio)	6.00%	6.00%
Tier 1 Capital to Risk Weighted Assets, Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions (Amount)	$ 34,098	$ 33,460
Tier 1 Capital to Risk Weighted Assets, Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions (Ratio)	8.00%	8.00%
Common Equity Tier 1 Capital to Risk Weighted Assets, Actual (Amount)	$ 45,446	$ 44,736
Common Equity Tier 1 Capital to Risk Weighted Assets, Actual (Ratio)	10.70%	10.70%
Common Equity Tier 1 Capital to Risk Weighted Assets, Minimum For Capital Requirement (Amount)	$ 19,180	$ 18,821
Common Equity Tier 1 Capital to Risk Weighted Assets, Minimum For Capital Requirement (Ratio)	4.50%	4.50%
Common Equity Tier 1 Capital to Risk Weighted Assets, Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions (Amount)	$ 27,704	$ 27,187
Common Equity Tier 1 Capital to Risk Weighted Assets, Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions (Ratio)	6.50%	6.50%
Tier 1 Capital to Average Assets, Actual (Amount)	$ 56,101	$ 55,391
Tier 1 Capital to Average Assets, Actual (Ratio)	8.50%	8.80%
Tier 1 Capital to Average Assets, Minimum For Capital Requirement (Amount)	$ 26,249	$ 25,254
Tier 1 Capital to Average Assets, Minimum For Capital Requirement (Ratio)	4.00%	4.00%
Tier 1 Capital to Average Assets, Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions (Amount)	$ 32,812	$ 31,567
Tier 1 Capital to Average Assets, Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions (Ratio)	5.00%	5.00%

XML

Allowance for Loan Losses - Summary of Risk Grades of Portfolio by Class (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Financing Receivable Recorded Investment [Line Items]
Loans	$ 357,950	$ 369,970	$ 356,871	$ 341,829	$ 320,132
Real Estate - Commercial [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	130,998	130,634
Other Real Estate Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	23,043	31,141
Real Estate 1 - 4 Family Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	7,600	7,805
Real Estate - Residential [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	71,122	76,404
Home Equity [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	51,216	52,541
Other Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	1,939	2,110
Commercial Loan [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	59,075	57,176
Consumer Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	12,957	12,159
Pass [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	344,220	356,114
Pass [Member] | Real Estate - Commercial [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	126,498	127,592
Pass [Member] | Other Real Estate Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	21,253	28,711
Pass [Member] | Real Estate 1 - 4 Family Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	7,600	7,805
Pass [Member] | Real Estate - Residential [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	67,647	69,900
Pass [Member] | Home Equity [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	50,255	52,028
Pass [Member] | Other Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	1,939	2,110
Pass [Member] | Commercial Loan [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	56,151	55,883
Pass [Member] | Consumer Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	12,877	12,085
Watch [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	9,014	10,810
Watch [Member] | Real Estate - Commercial [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	1,194	1,518
Watch [Member] | Other Real Estate Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	1,477	2,070
Watch [Member] | Real Estate - Residential [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	2,464	5,470
Watch [Member] | Home Equity [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	879	395
Watch [Member] | Commercial Loan [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	2,921	1,284
Watch [Member] | Consumer Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	79	73
Sub-standard [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	4,716	3,046
Sub-standard [Member] | Real Estate - Commercial [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	3,306	1,524
Sub-standard [Member] | Other Real Estate Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	313	360
Sub-standard [Member] | Real Estate - Residential [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	1,011	1,034
Sub-standard [Member] | Home Equity [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	82	118
Sub-standard [Member] | Commercial Loan [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	3	9
Sub-standard [Member] | Consumer Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans	$ 1	$ 1

XML

Shareholders' Equity and Regulatory Matters (Tables)

12 Months Ended

Dec. 31, 2019

Equity [Abstract]

Company's Consolidated Capital Ratios

The Company expects to meet or exceed these minimums without altering current operations or strategy.

											Minimum to Be Well
						Minimum					Capitalized Under
						For Capital					Prompt Corrective
	Actual					Requirement					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
December 31, 2019
Total Capital to Risk
Weighted Assets:
Consolidated	$	60,509		14.1	%	$	34,387		8.0	%	$	42,984		10.0	%
Uwharrie Bank		58,082		13.6	%		34,098		8.0	%		42,622		10.0	%
Tier 1 Capital to Risk
Weighted Assets:
Consolidated		48,536		11.3	%		25,790		6.0	%		34,387		8.0	%
Uwharrie Bank		56,101		13.2	%		25,573		6.0	%		34,098		8.0	%
Common Equity Tier 1 Capital to Risk Weighted    Assets:
Consolidated		37,881		8.8	%		19,343		4.5	%		27,940		6.5	%
Uwharrie Bank		45,446		10.7	%		19,180		4.5	%		27,704		6.5	%
Tier 1 Capital to
Average Assets:
Consolidated		48,536		7.4	%		26,336		4.0	%		32,920		5.0	%
Uwharrie Bank		56,101		8.5	%		26,249		4.0	%		32,812		5.0	%

											Minimum to Be Well
						Minimum					Capitalized Under
						For Capital					Prompt Corrective
	Actual					Requirement					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
December 31, 2018
Total Capital to Risk
Weighted Assets:
Consolidated	$	58,777		14.0	%	$	33,660		8.0	%	$	42,076		10.0	%
Uwharrie Bank		57,765		13.8	%		33,460		8.0	%		41,826		10.0	%
Tier 1 Capital to Risk
Weighted Assets:
Consolidated		46,869		11.1	%		25,245		6.0	%		33,660		8.0	%
Uwharrie Bank		55,391		13.2	%		25,095		6.0	%		33,460		8.0	%
Common Equity Tier 1 Capital to Risk Weighted    Assets:
Consolidated		36,214		8.6	%		18,934		4.5	%		27,349		6.5	%
Uwharrie Bank		44,736		10.7	%		18,821		4.5	%		27,187		6.5	%
Tier 1 Capital to
Average Assets:
Consolidated		46,869		7.4	%		25,347		4.0	%		31,683		5.0	%
Uwharrie Bank		55,391		8.8	%		25,254		4.0	%		31,567		5.0	%

XML

Long-Term Debt (Tables)

12 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

Scheduled Maturities of Advances and Notes Payable

As of December 31, 2019, the scheduled maturities of these long-term borrowings are as follows:

Year ending December 31,
(dollars in thousands)
2020	$	—
2021		—
2022		—
2023		—
2024		—
Thereafter		9,992
Total	$	9,992

XML

Consolidated Statements of Changes in Shareholders' Equity - USD ($) $ in Thousands	Total	Number of Common Shares Issued [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Undivided Profits [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Noncontrolling Interest [Member]
Beginning balance at Dec. 31, 2015	$ 43,314
Net Income	2,211
Ending balance at Dec. 31, 2016	43,525		$ 8,813	$ 12,540	$ 12,867	$ (1,318)	$ 10,623
Ending balance, shares at Dec. 31, 2016		7,050,315
Net Income	1,611				1,019		592
Tax Cuts and Jobs Act of 2017, reclassification from AOCI to retained earnings, tax effect	155				155	(155)
Repurchase of common stock	$ (391)		(95)	(296)
Repurchase of common stock, shares	(75,709)	(75,709)
2% stock dividend			173	580	(753)
2% stock dividend, shares		138,247
Cash paid – fractional shares	$ (6)				(6)
Stock options exercised, shares	0
Other comprehensive income	$ 366					366
Record preferred stock dividend series B (noncontrolling interest)	(416)						(416)
Record preferred stock dividend series C (noncontrolling interest)	(149)						(149)
Ending balance at Dec. 31, 2017	44,540		8,891	12,824	13,282	(1,107)	10,650
Ending balance, shares at Dec. 31, 2017		7,112,853
Net Income	2,477				1,907		570
Repurchase of common stock	$ (747)		(173)	(574)
Repurchase of common stock, shares	(138,629)	(138,629)
2% stock dividend			174	586	(760)
2% stock dividend, shares		138,939
Cash paid – fractional shares	$ (8)				(8)
Stock options exercised	$ 65		16	49
Stock options exercised, shares	13,378	13,378
Other comprehensive income	$ (587)					(587)
Record preferred stock dividend series B (noncontrolling interest)	(417)						(417)
Record preferred stock dividend series C (noncontrolling interest)	(148)						(148)
Ending balance at Dec. 31, 2018	45,175		8,908	12,885	14,421	(1,694)	10,655
Ending balance, shares at Dec. 31, 2018		7,126,541
Net Income	3,087				2,523		564
Repurchase of common stock	$ (850)		(211)	(639)
Repurchase of common stock, shares	(168,683)	(168,683)
2% stock dividend			173	538	(711)
2% stock dividend, shares		138,062
Cash paid – fractional shares	$ (7)				(7)
Stock options exercised, shares	0
Other comprehensive income	$ 2,017					2,017
Record preferred stock dividend series B (noncontrolling interest)	(416)						(416)
Record preferred stock dividend series C (noncontrolling interest)	(148)						(148)
Ending balance at Dec. 31, 2019	$ 48,858		$ 8,870	$ 12,784	$ 16,226	$ 323	$ 10,655
Ending balance, shares at Dec. 31, 2019		7,095,920

XML

Significant Accounting Policies - Additional Information (Detail)		1 Months Ended	12 Months Ended
	Nov. 12, 2018	Jan. 31, 2013 USD ($)	Dec. 31, 2019 USD ($) Branch Segment Property shares	Dec. 31, 2018 USD ($) shares	Dec. 31, 2017 USD ($)	Dec. 31, 2013 USD ($)
Business Acquisition [Line Items]
Common stock exchange			1
Number of branch locations | Branch			10
Number of branch offices | Branch			2
Number of segments | Segment			2
Mortgage and commercial loans period			90 days
Credit card and personal loans period			180 days
Credit card loan accrual period			90 days
Minimum required sustained performance			6 months
Outstanding awards			$ 0	$ 0
Interest or penalties accrued			$ 0	$ 0	$ 0
Stock options outstanding | shares			0	0
Stock dividend, percentage	2.00%		2.00%	2.00%	2.00%
Dividends Payable, date declared	Nov. 12, 2019
Dividends Payable, date to be paid	Dec. 09, 2019
Dividends Payable, date of record	Nov. 25, 2019
Number of property | Property			3
Lease term			greater than one year
Interchange and Card Transaction Fees [Member]
Business Acquisition [Line Items]
Noninterest income fees			$ 826,000	$ 648,000	$ 656,000
ASU 2014-09 [Member]
Business Acquisition [Line Items]
Gross interchange and card transaction fees			2,000,000	1,700,000	1,600,000
Interchange and card transaction related network costs			$ 1,200,000	$ 1,100,000	$ 913,000
Preferred Stock Series B [Member]
Business Acquisition [Line Items]
Preferred stock issued		$ 7,900,000
Dividends rate		5.30%
Voting rights			The preferred stock has no voting rights
Preferred Stock Series C [Member]
Business Acquisition [Line Items]
Preferred stock issued						$ 2,800,000
Dividends rate						5.30%
Voting rights			The preferred stock has no voting rights
Minimum [Member] | ASU 2016-02 [Member]
Business Acquisition [Line Items]
Expected increase in assets and liabilities due to adoption of new accounting standard			$ 1,900,000
Maximum [Member] | ASU 2016-02 [Member]
Business Acquisition [Line Items]
Expected increase in assets and liabilities due to adoption of new accounting standard			$ 2,000,000
Furniture, Fixtures and Equipment [Member] | Minimum [Member]
Business Acquisition [Line Items]
Useful lives			5 years
Furniture, Fixtures and Equipment [Member] | Maximum [Member]
Business Acquisition [Line Items]
Useful lives			7 years
Equipment [Member] | Minimum [Member]
Business Acquisition [Line Items]
Useful lives			5 years
Equipment [Member] | Maximum [Member]
Business Acquisition [Line Items]
Useful lives			7 years
Building [Member] | Minimum [Member]
Business Acquisition [Line Items]
Useful lives			10 years
Building [Member] | Maximum [Member]
Business Acquisition [Line Items]
Useful lives			39 years
Leasehold Improvements [Member] | Minimum [Member]
Business Acquisition [Line Items]
Useful lives			10 years
Leasehold Improvements [Member] | Maximum [Member]
Business Acquisition [Line Items]
Useful lives			39 years
Anson BanCorp Inc [Member]
Business Acquisition [Line Items]
Acquisition			Jan. 19, 2000
Gateway Mortgage Inc [Member]
Business Acquisition [Line Items]
Acquisition			Aug. 04, 2000
Cabarrus Bank and Trust Company [Member]
Business Acquisition [Line Items]
Date of capitalization of new wholly-owned subsidiary			Apr. 10, 2003
Uwharrie Mortgage Inc [Member]
Business Acquisition [Line Items]
Date of subsidiary incorporation			Apr. 07, 2004

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Statement Of Financial Position [Abstract]
Securities held for sale, fair value	$ 13,499	$ 10,750
Common stock, par value	$ 1.25	$ 1.25
Common stock, shares authorized	20,000,000	20,000,000
Common stock, shares issued	7,095,920	7,126,541
Common stock, shares outstanding	7,095,920	7,126,541

XML

Premises and Equipment - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Property Plant And Equipment [Abstract]
Depreciation expense	$ 1,100,000	$ 1,100,000	$ 857,000

XML

Long-Term Debt - Scheduled Maturities of Advances and Notes Payable (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Debt Disclosure [Abstract]
2020	$ 0
2021	0
2022	0
2023	0
2024	0
Thereafter	9,992
Total	$ 9,992	$ 9,974

XML

Deposits - Maturities of Fixed-Rate Time Deposits (Detail) $ in Thousands	Dec. 31, 2019 USD ($)
Time Deposits $250,000 and Over [Member]
Time Deposits By Maturity [Line Items]
2020	$ 53,866
2021	1,507
2022	309
Total	55,682
Other Time Deposits [Member]
Time Deposits By Maturity [Line Items]
2020	39,650
2021	15,522
2022	2,977
2023	610
2024	882
Total	$ 59,641

XML

Loan Servicing Assets - Summary of Mortgage Servicing Rights (Detail) - Mortgage Servicing Assets [Member] - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Finite-Lived Intangible Assets [Line Items]
Beginning of year servicing rights:	$ 1,850	$ 2,125	$ 2,271
Amounts capitalized	694	388	587
Amortization	(821)	(663)	(733)
End of year	$ 1,723	$ 1,850	$ 2,125

XML

Investment Securities - Amortized Cost and Fair Value of Held to Maturity Securities Portfolio (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Investments Debt And Equity Securities [Abstract]
Due within one year, Amortized Cost	$ 4,525
Due after one but within five years, Amortized Cost	4,975
Due after five but within ten years, Amortized Cost	3,928
Total Securities held for maturity, Amortized Cost	13,428
Due within one year, Estimated Fair Value	4,530
Due after one but within five years, Estimated Fair Value	5,040
Due after five but within ten years, Estimated Fair Value	3,929
Total Securities held for maturity, Estimated Fair Value	$ 13,499	$ 10,750

XML

Significant Accounting Policies - Accumulated Other Comprehensive Income (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning balance	$ 45,175	$ 44,540	$ 43,525
Total other comprehensive income (loss)	2,017	(587)	366
Tax Cuts and Jobs Act of 2017, reclassification from AOCI to retained earnings, tax effect			155
Ending balance	48,858	45,175	44,540
Unrealized Holding Gains on Available-for-Sale Securities (Net) [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning balance	(1,694)	(1,107)	(1,318)
Accumulated Other comprehensive income (loss) before reclassifications, net of ($595), $171 and ($185) tax effect, respectively	1,989	(587)	356
Amounts reclassified from accumulated other comprehensive income, net of ($7), $0, and ($4) tax effect, respectively	28		10
Total other comprehensive income (loss)	2,017	(587)	366
Tax Cuts and Jobs Act of 2017, reclassification from AOCI to retained earnings, tax effect			(155)
Ending balance	$ 323	$ (1,694)	$ (1,107)

XML

Investment Securities - Additional Information (Detail)	Dec. 31, 2019 USD ($) Security	Dec. 31, 2018 USD ($) Security
Schedule of Available-for-sale Securities [Line Items]
Federal Reserve stock owned by Company | $	$ 509,000	$ 509,000
Federal Home Loan Bank stock (FHLB) | $	635,000	585,000
Securities available for sale pledged as collateral on public deposits | $	$ 65,300,000	$ 71,500,000
U.S. Government Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Number of available for sale securities related to unrealized losses less than twelve months	3	4
Number of available for sale securities related to unrealized losses more than twelve months	4	16
Number of securities related to unrealized losses		2
GSE - Mortgage-backed Securities and CMO's [Member]
Schedule of Available-for-sale Securities [Line Items]
Number of available for sale securities related to unrealized losses less than twelve months	6	1
Number of available for sale securities related to unrealized losses more than twelve months	9	16
U S States And Political
Schedule of Available-for-sale Securities [Line Items]
Number of available for sale securities related to unrealized losses more than twelve months		8
Number of securities related to unrealized losses		2
Corporate Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Number of available for sale securities related to unrealized losses less than twelve months	1	1
Number of available for sale securities related to unrealized losses more than twelve months		1
Number of securities related to unrealized losses	1

XML

Troubled Debt Restructures (Tables)

12 Months Ended

Dec. 31, 2019

Receivables [Abstract]

Breakdown of Types of Concessions Made by Loan Class

For the twelve months ended December 31, 2019, 2018 and 2017, the following table presents a breakdown of the types of concessions made by loan class:

	Year Ended December 31, 2019
			Pre-Modification		Post-Modification
	Number		Outstanding Recorded		Outstanding Recorded
	of Contracts		Investment		Investment
			(dollars in thousands)
Extend payment terms:
Commercial		—	$	—	$	—
Real estate - commercial		—		—		—
Other real estate construction		—		—		—
Real estate 1 – 4 family construction		—		—		—
Real estate – residential		—		—		—
Home equity		—		—		—
Consumer loans		—		—		—
Other loans		—		—		—
		—	$	—	$	—
Other:
Commercial		1	$	50	$	4
Real estate - commercial		1		1,629		838
Other real estate construction		—		—		—
Real estate 1 – 4 family construction		—		—		—
Real estate – residential		3		261		219
Home equity		—		—		—
Consumer loans		—		—		—
Other loans		—		—		—
		5	$	1,940	$	1,061
Total		5	$	1,940	$	1,061

	Year Ended December 31, 2018
			Pre-Modification		Post-Modification
	Number		Outstanding Recorded		Outstanding Recorded
	of Contracts		Investment		Investment
			(dollars in thousands)
Extend payment terms:
Commercial		—	$	—	$	—
Real estate - commercial		—		—		—
Other real estate construction		—		—		—
Real estate 1 – 4 family construction		—		—		—
Real estate – residential		—		—		—
Home equity		—		—		—
Consumer loans		—		—		—
Other loans		—		—		—
		—	$	—	$	—
Other:
Commercial		—	$	—	$	—
Real estate - commercial		—		—		—
Other real estate construction		—		—		—
Real estate 1 – 4 family construction		—		—		—
Real estate – residential		6		434		387
Home equity		—		—		—
Consumer loans		—		—		—
Other loans		—		—		—
		6	$	434	$	387
Total		6	$	434	$	387

	Year Ended December 31, 2017
			Pre-Modification		Post-Modification
	Number		Outstanding Recorded		Outstanding Recorded
	of Contracts		Investment		Investment
			(dollars in thousands)
Extend payment terms:
Commercial		—	$	—	$	—
Real estate - commercial		—		—		—
Other real estate construction		—		—		—
Real estate 1 – 4 family construction		—		—		—
Real estate – residential		—		—		—
Home equity		—		—		—
Consumer loans		—		—		—
Other loans		—		—		—
		—	$	—	$	—
Other:
Commercial		1	$	12	$	10
Real estate - commercial		2		178		173
Other real estate construction		—		—		—
Real estate 1 – 4 family construction		—		—		—
Real estate – residential		6		708		675
Home equity		—		—		—
Consumer loans		1		9		5
Other loans		—		—		—
		10	$	907	$	863
Total		10	$	907	$	863

Schedule of Status of Types of Debt Restructuring

The following table presents the successes and failures of the types of modifications within the previous twelve months as of December 31, 2019, 2018 and 2017:

	Paid In Full				Paying as restructured				Converted to nonaccrual				Foreclosure/ Default
	Number of		Recorded		Number of		Recorded		Number of		Recorded		Number of		Recorded
	Loans		Investments		Loans		Investments		Loans		Investments		Loans		Investments
	(dollars in thousands)
December 31, 2019
Extended payment terms		—	$	—		—	$	—		—	$	—		—	$	—
Other		1		37		5		1,940		—		—		—		—
Total		1	$	37		5	$	1,940		—	$	—		—	$	—

	Paid In Full				Paying as restructured				Converted to nonaccrual				Foreclosure/ Default
	Number of		Recorded		Number of		Recorded		Number of		Recorded		Number of		Recorded
	Loans		Investments		Loans		Investments		Loans		Investments		Loans		Investments
	(dollars in thousands)
December 31, 2018
Extended payment terms		—	$	—		—	$	—		—	$	—		—	$	—
Other		8		1,056		6		434		—		—		1		242
Total		8	$	1,056		6	$	434		—	$	—		1	$	242

	Paid In Full				Paying as restructured				Converted to nonaccrual				Foreclosure/ Default
	Number of		Recorded		Number of		Recorded		Number of		Recorded		Number of		Recorded
	Loans		Investments		Loans		Investments		Loans		Investments		Loans		Investments
	(dollars in thousands)
December 31, 2017
Extended payment terms		—	$	—		—	$	—		—	$	—		—	$	—
Other		6		217		10		863		—		—		1		15
Total		6	$	217		10	$	863		—	$	—		1	$	15

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Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Accumulated Other Comprehensive Income

The following table presents the changes in accumulated other comprehensive income for the years ended December 31, 2019, 2018 and 2017:

	Year ended December 31,
	2019			2018			2017
	(dollars in thousands)
Beginning Balance	$	(1,694	)	$	(1,107	)	$	(1,318	)
Accumulated Other comprehensive income (loss) before reclassifications,    net of ($595), $171 and ($185)  tax effect, respectively		1,989			(587	)		356
Amounts reclassified from accumulated other comprehensive    income, net of ($7), $0, and ($4) tax effect,    respectively		28			—			10
Net current-period other comprehensive loss		2,017			(587	)		366
Tax Cuts and Jobs Act of 2017, reclassification from AOCI   to retained earnings, tax effect		—			—			(155	)
Ending Balance	$	323		$	(1,694	)	$	(1,107	)

Computation of Weighted Average Shares Used in the Calculation of Basic and Dilutive Earnings Per Share

The computation of weighted average shares used in the calculation of basic and dilutive earnings per share is summarized below:

	2019		2018		2017
Weighted average number of common shares used in    computing basic net income per common share		7,199,262		7,229,333		7,427,036
Effect of dilutive stock options		—		—		768
Weighted average number of common shares and dilutive    potential common shares used in computing diluted net    income per common share		7,199,262		7,229,333		7,427,804

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Deposits (Tables)

12 Months Ended

Dec. 31, 2019

Banking And Thrift [Abstract]

Schedule of Composition of Time Deposits

The composition of deposits at December 31, 2019 and 2018 is as follows:

	2019					2018
	Amount		Percentage of Total			Amount		Percentage of Total
	(dollars in thousands)
Demand noninterest-bearing	$	150,283		26	%	$	129,714		23	%
Interest checking and money market		263,136		45	%		324,391		57	%
Savings		57,136		10	%		54,784		10	%
Time deposits $250,000 and over		55,682		9	%		7,920		1	%
Other time deposits		59,641		10	%		50,092		9	%
Total	$	585,878		100	%	$	566,901		100	%

Maturities of Fixed-Rate Time Deposits

The maturities of fixed-rate time deposits at December 31, 2019 are reflected in the table below:

	Time Deposits		Other
Year ending December 31,	$250,000 and Over		Time Deposits
	(dollars in thousands)
2020		53,866		39,650
2021		1,507		15,522
2022		309		2,977
2023		—		610
2024		—		882
Thereafter		—		—
Total	$	55,682	$	59,641

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Loans Held for Investment

12 Months Ended

Dec. 31, 2019

Receivables [Abstract]

Loans Held for Investment

Note 3 – Loans Held for Investment

The composition of net loans held for investment by class as of December 31, 2019 and 2018 is as follows:

	2019			2018
	(dollars in thousands)
Commercial
Commercial	$	59,075		$	57,176
Real estate - commercial		130,998			130,634
Other real estate construction loans		23,043			31,141
Noncommercial
Real estate 1-4 family construction		7,600			7,805
Real estate - residential		71,370			76,564
Home equity		51,216			52,541
Consumer loans		12,957			12,159
Other loans		1,939			2,110
		358,198			370,130
Less:
Allowance for loan losses		(1,981	)		(2,374	)
Deferred loan fees, net		(248	)		(160	)
Loans held for investment, net	$	355,969		$	367,596

Although the Bank’s loan portfolio is diversified, there is a concentration of mortgage real estate loans, primarily 1 to 4 family residential and construction mortgage loans and home equity loans, which represent 36.34% of total loans. Additionally, there is a concentration in commercial loans secured primarily by real estate, shopping center locations, commercial land development, commercial buildings, equipment, and general commercial loans that represent 59.50% of total loans. There is not a concentration of a particular type of credit in this group of commercial loans.

Total recorded investment in impaired loans, which consisted of nonaccrual loans and other loans identified by management as impaired, totaled $6.8 million and $4.5 million at December 31, 2019 and 2018, respectively. There were no loans 90 days past due and still accruing at December 31, 2019 or at December 31, 2018.

Restructured loans at December 31, 2019 and December 31, 2018 totaled $3.9 million and $3.5 million, respectively, and are included in the impaired loan total. The carrying value of foreclosed properties held as other real estate was $494,000 and $1.0 million at December 31, 2019 and 2018, respectively. The Company had $130,000 in foreclosed residential real estate and $387,000 of residential real estate in process of foreclosure at December 31, 2019.

The Company had loans of $166.9 million and $187.6 million pledged to borrowings at Federal Home Loan Bank and the Federal Reserve Bank at December 31, 2019 and 2018, respectively.

The Company’s loan policies are written to address loan-to-value ratios and collateralization methods with respect to each lending category. Consideration is given to the economic and credit risk of lending areas and customers associated with each category.

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Premises and Equipment

12 Months Ended

Dec. 31, 2019

Property Plant And Equipment [Abstract]

Premises and Equipment

Note 7 - Premises and Equipment

The major classes of premises and equipment and the total accumulated depreciation at December 31, 2019 and 2018 are listed below:

	2019		2018
	(dollars in thousands)
Land	$	3,192	$	3,215
Building and improvements		15,783		15,150
ROU assets		1,945		—
Furniture and equipment		8,518		8,808
Total fixed assets		29,438		27,173
Less accumulated depreciation		12,376		12,373
Net fixed assets	$	17,062	$	14,800

Depreciation expense was $1.1 million for the year ended December 31, 2019 compared to $1.1 million and $857,000 for the comparable periods of 2018 and 2017, respectively, and is included in net occupancy expense.

ROU assets are discussed further in Note 8 – Leases.

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Selected Financial Data - Summary of Quarterly Financial Information (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Quarterly Financial Information Disclosure [Abstract]
Interest income	$ 23,767	$ 21,873	$ 19,340	$ 18,046	$ 17,847
Interest expense	3,565	1,882	1,277	1,310	1,733
Net interest income	20,202	19,991	18,063	16,736	16,114
Provision for (recovery of) loan losses	(588)	90	(236)	(88)	(620)
Noninterest income	9,005	8,279	8,425	9,357	7,712
Noninterest expense	25,937	25,124	23,304	23,075	21,633
Income taxes	771	579	1,809	895	806
Net Income	3,087	2,477	1,611	2,211	2,007
Less: Net income attributable to noncontrolling interest	(564)	(570)	(592)	(593)	(592)
Net income attributable to Uwharrie Capital Corp and common shareholders	$ 2,523	$ 1,907	$ 1,019	$ 1,618	$ 1,415
Basic	$ 0.35	$ 0.26	$ 0.14	$ 0.21	$ 0.19
Diluted	0.35	0.26	0.14	0.21	0.19
Book value	$ 5.38	$ 4.75	$ 4.58	$ 4.40	$ 4.33
Basic	7,199,262	7,229,333	7,427,036	7,531,360	7,634,024
Diluted	7,199,262	7,229,333	7,427,804	7,531,470	7,634,024
Return on average assets	0.48%	0.40%	0.28%	0.41%	0.38%
Return on average equity	6.43%	5.57%	3.62%	4.99%	4.65%
Average equity to average assets	7.43%	7.26%	7.78%	8.29%	8.27%
Assets	$ 656,793	$ 632,304	$ 577,253	$ 548,230	$ 532,202
Loans held for investment	357,950	369,970	356,871	341,829	320,132
Securities	101,952	102,136	107,201	117,889	100,500
Deposits	585,878	566,901	512,628	485,719	467,733
Borrowed funds	10,618	11,164	11,286	12,208	15,305
Shareholders’ equity	48,858	45,175	44,540	43,525	43,314
Assets	645,681	612,403	572,630	534,296	521,699
Loans held for investment	369,540	369,419	348,980	334,317	316,485
Securities	100,775	103,223	113,025	107,396	112,348
Deposits	575,480	548,296	509,352	470,921	458,655
Borrowed funds	10,956	11,284	11,679	12,898	14,432
Shareholders’ equity	$ 47,993	$ 44,468	$ 44,542	$ 44,283	$ 43,123

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Fair Values of Financial Instruments and Interest Rate Risk - Quantitative Information about Level 3 Fair Value Measurements (Detail)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Discounted Cash Flows [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Valuation Technique	Discounted cash flows	Discounted cash flows
Discounted Cash Flows [Member] | Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair value inputs discount rate and estimated costs to sell	4.00%	4.00%
Discounted Cash Flows [Member] | Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair value inputs discount rate and estimated costs to sell	8.75%	8.75%
Impaired Loans [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Valuation Technique	Discounted appraisals	Discounted appraisals
Impaired Loans [Member] | Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair value inputs discount rate and estimated costs to sell	0.00%	0.00%
Impaired Loans [Member] | Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair value inputs discount rate and estimated costs to sell	25.00%	25.00%
OREO [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Valuation Technique	Discounted appraisals	Discounted appraisals
OREO [Member] | Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair value inputs discount rate and estimated costs to sell	0.00%	0.00%
OREO [Member] | Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair value inputs discount rate and estimated costs to sell	10.00%	10.00%

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2019

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 13 - Commitments and Contingencies

Financial Instruments with Off-Balance Sheet Risk

The subsidiary bank is party to financial instruments with off-balance sheet risks in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, lines of credit and standby letters of credit. These instruments involve elements of credit risk in excess of amounts recognized in the accompanying financial statements.

The subsidiary bank’s risk of loss with the unfunded loans and lines of credit or standby letters of credit is represented by the contractual amount of these instruments. The Bank uses the same credit policies in making commitments under such instruments as it does for on-balance sheet instruments. The amount of collateral obtained, if any, is based on management’s credit evaluation of the borrower. Collateral held varies, but may include accounts receivable, inventory, real estate and time deposits with financial institutions. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Credit card commitments are unsecured.

As of December 31, 2019 and 2018, outstanding financial instruments whose contract amounts represent credit risk were as follows:

	2019		2018
	(dollars in thousands)
Commitments to extend credit	$	134,241	$	110,329
Credit card commitments		11,650		10,611
Standby letters of credit		1,213		933
	$	147,104	$	121,873

Contingencies

In the normal course of business, the Company is involved in various legal proceedings. In the opinion of management, any liability resulting from such proceedings would not have a material adverse effect on the consolidated financial statements.

Financial Instruments with Concentration of Credit Risk

The subsidiary bank makes commercial, agricultural, real estate mortgage, home equity and consumer loans primarily in Stanly, Anson, Cabarrus and Mecklenburg counties. A substantial portion of the Company’s customers’ ability to honor their contracts is dependent on the economy in these counties.

Although the Company’s composition of loans is diversified, there is some concentration of mortgage real estate loans, primarily 1-to-4 family residential mortgage loans and in commercial loans secured primarily by real estate, shopping center locations, commercial land development, commercial buildings and equipment in the total portfolio. The Bank’s policy is to abide by real estate loan-to-value margin limits corresponding to guidelines issued by the federal supervisory agencies on March 19, 1993. The Bank’s lending policy for all loans requires that they be supported by sufficient cash flows at the time of origination.

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Employee and Director Benefit Plans

12 Months Ended

Dec. 31, 2019

Postemployment Benefits [Abstract]

Employee and Director Benefit Plans

Note 17 - Employee and Director Benefit Plans

Employees’ 401(k) Retirement Plan

The Company has established an associate tax deferred savings plan under Section 401(k) of the Internal Revenue Code of 1986. All associates are eligible to make elective deferrals on the first day of the calendar month coincident or next following the date the associate attains the age of 18 and completes thirty days of eligibility service. Employees are 100% vested in the plan once they enroll.

The Company’s annual contribution to the plan was $446,228 in 2019, $428,162 in 2018 and $361,936 in 2017, determined as follows:

• The Company will contribute a safe harbor matching contribution in an amount equal to: (i) 100% of the matched employee contributions that are not in excess of 3% of compensation, plus (ii) 50% of the amount of the matched employee contributions that exceed 3% of compensation, but do not exceed 5% of compensation.

• A discretionary contribution, subject to approval by the Board of Directors, limited to an amount not to exceed the maximum amount deductible for income tax purposes.

Note 17 - Employee and Director Benefit Plans (Continued)

Supplemental Executive Retirement Plan

The Company has implemented a non-qualifying deferred compensation plan for certain executive officers. Certain of the plan benefits will accrue and vest during the period of employment and will be paid in fixed monthly benefit payments for up to ten years upon separation from service. The plan also provides for payment of death benefits and for payment of disability benefits in the event the officer becomes permanently disabled prior to separation from service.

Effective December 31, 2008, this plan was amended and restated to comply with Section 409A of the Internal Revenue Code. The participants’ account liability balances as of December 31, 2008 could be transferred into a trust fund, where investments will be participant-directed.

The plan is structured as a defined contribution plan and the Company’s expected annual funding contribution for the participants has been calculated through the participant’s expected retirement date. Under terms of the agreement, the Company has reserved the absolute right, at its sole discretion, to either fund or refrain from funding the plan. The plan also provides for payment of death benefits and for payment of disability benefits in the event the officer becomes permanently disabled prior to separation from service. The plans assets are maintained in a rabbi trust and are recorded at fair value with the corresponding liability adjusted to the same fair value.

During each year of 2019, 2018 and 2017, $336,800 was expensed for benefits provided under the plans. The liability accrued for deferred compensation under the plan amounted to $4.7 million and $4.4 million at December 31, 2019 and 2018, respectively.

Note 17 - Employee and Director Benefit Plans (Continued)

Split-Dollar Life Insurance

The Company has entered into Life Insurance Endorsement Method Split-Dollar Agreements with certain officers. Under these agreements, upon death of the officer, the Company first recovers the cash surrender value of the contract and then shares the remaining death benefits from insurance contracts, which are written with different carriers, with the designated beneficiaries of the officers. The death benefit to the officers’ beneficiaries is a multiple of base salary at the time of the agreements. The Company, as owner of the policies, retains an interest in the life insurance proceeds and a 100% interest in the cash surrender value of the policies. During 2019, 2018, and 2017, the expense associated with these policies was $13,107, $1,846, and $10,533 respectively.

The liability associated with the split-dollar life insurance policies is $786,000 and $773,000 at December 31, 2019 and 2018, respectively.

Stock Grant Plan

During 2015, the Company adopted the 2015 Stock Grant Plan (“SGP”), under which the Company, at its discretion, may choose to make grants or awards of Uwharrie Capital Corp common stock (the “Common Stock”) to employees, directors or independent contractors of the Company or its subsidiaries as an alternate form of compensation or as a performance bonus. Shares of Common Stock to be used for Stock Grants under this Plan will be outstanding shares purchased by a revocable trust formed by the Company (the “Trust”). Participants will be 100% vested in the shares purchased on their behalf as soon as the Trust’s purchase is completed. The Company recognizes expense for the value of the shares at the time they are purchased by the Trust. During 2019 there were 14,400 shares granted at an expense of $72,000 compared to 8,926 shares granted at an expense of $50,000 in 2018 and 8,734 shares granted at an expense of $50,000 in 2017.

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Cash flows from operating activities
Net Income	$ 3,087	$ 2,477	$ 1,611
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	1,074	1,067	857
Net amortization of security premiums/discounts AFS	555	767	850
Net amortization of security premiums/discounts HTM	139	146	147
Net amortization of loan servicing rights	831	663	733
Impairment of foreclosed real estate	237	(12)	85
(Recovery) provision for loan losses	(588)	90	(236)
Deferred income taxes	15	(39)	691
Net realized loss on sales / calls available for sale securities	35		14
Proceeds from sales of loans held for sale	126,011	96,718	97,360
Origination of loans held for sale	(124,973)	(97,764)	(96,684)
(Gain) loss on sale of premises, equipment and other assets	(6)	4
Increase in cash surrender value of life insurance	(125)	(125)	(124)
(Gain) loss on sales of foreclosed real estate	40	(11)	(35)
(Increase) decrease in prepaid assets	(156)	228	40
Net change in interest receivable	97	(54)	(80)
Net change in other assets	421	(422)	(602)
Net change in interest payable	39	(132)	(3)
Net change in other liabilities	(6)	397	1,129
Net cash provided by operating activities	6,727	3,998	5,753
Cash flows from investing activities
Proceeds from sales, maturities, calls and paydowns of securities available for sale	27,270	7,853	16,185
Proceeds from sales, maturities, calls and paydowns of securities held to maturity	270	475	385
Purchase of securities available for sale	(22,466)	(4,934)	(6,338)
Purchase of securities held to maturity	(3,000)
Net (increase) decrease in loans	12,034	(13,433)	(15,416)
Purchases of life insurance investment			(1,525)
Proceeds from sale of premises, equipment and other assets	189	4
Purchase of premises and equipment	(1,263)	(829)	(1,730)
Proceeds from sales of foreclosed real estate	543	1,533	2,138
Net change in restricted stock	(50)	(27)	(15)
Net cash provided by (used in) investing activities	13,527	(9,358)	(6,316)
Cash flows from financing activities
Net increase in deposit accounts	18,977	54,273	26,909
Net decrease in short-term borrowed funds	(564)	(562)	(410)
Proceeds from long-term debt	9,992	440
Repayment of long-term debt	(9,974)		(512)
Repurchase of common stock, net	(850)	(747)	(391)
Stock option exercise		65
Dividends on preferred stock	(564)	(570)	(592)
Cash paid for fractional shares	(7)	(8)	(6)
Net cash provided by financing activities	17,010	52,891	24,998
Increase in cash and cash equivalents	37,264	47,531	24,435
Cash and cash equivalents, beginning of year	117,934	70,403	45,968
Cash and cash equivalents, end of year	155,198	117,934	70,403
Supplemental disclosures of cash flow information
Interest paid	3,526	2,014	1,280
Income taxes paid	933	503	852
Supplemental schedule of non-cash activities
Net change in fair value of securities available for sale, net of tax	2,017	(587)	366
Initial ROU asset for leased properties	2,256
Initial lease liability for leased properties	2,308
Loans transferred to foreclosed real estate	267	160	361
Company financed OREO	(70)		(356)
Mortgage servicing rights capitalized	$ 684	$ 313	$ 586

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Parent Company Financial Data (Tables)

12 Months Ended

Dec. 31, 2019

Condensed Financial Information Of Parent Company Only Disclosure [Abstract]

Condensed Balance Sheets

Condensed Balance Sheets

	December 31,
	2019		2018
	(dollars in thousands)
Assets
Cash and demand deposits	$	526	$	287
Interest-earning deposits		1,589		1,256
Investments in:
Bank subsidiaries		45,770		43,042
Nonbank subsidiaries		381		450
Other assets		2,073		1,638
Total assets	$	50,339	$	46,673
Liabilities and shareholders’ equity
Master notes	$	626	$	1,190
Short term debt		—		—
Long term debt		9,992		9,974
Other liabilities		1,518		989
Total liabilities		12,136		12,153
Shareholders’ equity		38,203		34,520
Total liabilities and shareholders’ equity	$	50,339	$	46,673

Condensed Statements of Income

Condensed Statements of Income

	2019			2018			2017
	(dollars in thousands)
Equity in undistributed earnings (loss) of subsidiaries	$	1,206		$	2,026		$	745
Dividends received from subsidiaries		2,750			1,150			1,500
Interest income		15			17			6
Other income		41			80			93
Interest expense		(577	)		(571	)		(564	)
Other operating expense		(578	)		(410	)		(436	)
Income tax benefit		230			185			267
Net income	$	3,087		$	2,477		$	1,611
Consolidated net income	$	3,087		$	2,477		$	1,611
Less: Net income attributable to noncontrolling interest		(564	)		(570	)		(592	)
Net income attributable to Uwharrie Capital Corp		2,523			1,907			1,019
Net income available to common shareholders	$	2,523		$	1,907		$	1,019
Net income per common share
Basic	$	0.36		$	0.26		$	0.14
Diluted	$	0.36		$	0.26		$	0.14
Weighted average shares outstanding
Basic		7,066,880			7,229,333			7,427,036
Diluted		7,066,880			7,229,333			7,427,804

Condensed Statements of Cash Flows

Condensed Statements of Cash Flows

	2019			2018			2017
	(dollars in thousands)
Cash flows from operating activities
Net income	$	3,087		$	2,477		$	1,611
Adjustments to reconcile net income to net cash provided by operating    activities:
Equity in undistributed (earnings) loss of subsidiaries		(1,206	)		(2,026	)		(745	)
Increase in other assets		(435	)		(198	)		(124	)
Increase in other liabilities		528			220			267
Net cash provided by operating activities		1,974			473			1,009
Cash flows from financing activities
Decrease in master notes		(564	)		(562	)		(410	)
Decrease in short-term debt		—			—			(500	)
Increase (decrease) in long-term debt		(440	)		440			—
Net increase in subordinated debentures		458			—			—
Net increase in investment in subsidiaries		—			(250	)		—
Net proceeds from issuance of common stock - stock options		—			65			—
Repurchase of common stock, net		(850	)		(747	)		(391	)
Cash paid for fractional shares		(7	)		(7	)		(7	)
Other, net		1			—			—
Net cash used by financing activities		(1,402	)		(1,061	)		(1,308	)
Net decrease in cash and cash equivalents		572			(588	)		(299	)
Cash and cash equivalents at beginning of year		1,543			2,131			2,430
Cash and cash equivalents at end of year	$	2,115		$	1,543		$	2,131

XML

Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2019

Commitments And Contingencies Disclosure [Abstract]

Outstanding Financial Instruments Whose Contract Amounts Represent Credit Risk

As of December 31, 2019 and 2018, outstanding financial instruments whose contract amounts represent credit risk were as follows:

	2019		2018
	(dollars in thousands)
Commitments to extend credit	$	134,241	$	110,329
Credit card commitments		11,650		10,611
Standby letters of credit		1,213		933
	$	147,104	$	121,873

XML

Consolidated Statements of Income (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Statement [Abstract]
Reclassification from accumulated other comprehensive income	$ 35	$ 0	$ 14
Tax effect on amount reclassified from accumulated other comprehensive income	$ (7)	$ 0	$ (4)

XML

Document and Entity Information - USD ($)
$ in Thousands

12 Months Ended

Dec. 31, 2019

Mar. 02, 2020

Jun. 30, 2019

Cover [Abstract]

Document Type

10-K

Amendment Flag

false

Document Period End Date

Dec. 31, 2019

Document Fiscal Year Focus

2019

Document Fiscal Period Focus

FY

Entity Registrant Name

UWHARRIE CAPITAL CORP

Entity Central Index Key

0000898171

Entity Interactive Data Current

Yes

Trading Symbol

UWHR

Current Fiscal Year End Date

--12-31

Entity Well-known Seasoned Issuer

No

Entity Current Reporting Status

Yes

Entity Voluntary Filers

No

Entity Filer Category

Non-accelerated Filer

Entity Small Business

true

Entity Emerging Growth Company

false

Title of 12(b) Security

COMMON STOCK, PAR VALUE $1.25 PER SHARE

Security Exchange Name

NASDAQ

Entity File Number

000-22062

Entity Incorporation, State or Country Code

NC

Entity Tax Identification Number

56-1814206

Entity Address, Address Line One

132 NORTH FIRST STREET

Entity Address, City or Town

ALBEMARLE

Entity Address, State or Province

NC

Entity Address, Postal Zip Code

28001

City Area Code

704

Local Phone Number

983-6181

Document Annual Report

true

Document Transition Report

false

Documents Incorporated by Reference

Portions of the Registrant’s 2019 Annual Report to Shareholders are incorporated by reference into Part II of this report. Portions of the Registrant’s definitive Proxy Statement for the 2020 Annual Meeting of Shareholders are incorporated by reference into Part III of this report.

Entity Shell Company

false

Entity Common Stock, Shares Outstanding

7,095,920

Entity Public Float

$ 33,633,344

XML

Loans Held for Investment - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Noncommercial segment Loans	$ 6,800,000	$ 4,500,000
Accruing Loans 90 or More Days Past Due	0	0
Restructured loans	3,900,000	3,500,000
Restructured loans included in impaired loans	3,900,000	3,500,000
Carrying value of foreclosed properties	494,000	1,000,000
Amount pledged to borrowings at Federal Home Loan Bank	166,900,000	187,600,000
Real Estate - Residential [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Accruing Loans 90 or More Days Past Due	0	0
Foreclosed residential real estate, loan amount	130,000
Real estate in process of foreclosure, loan amount	$ 387,000
Mortgages [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Concentrations of Loans as Percentage of Net Loans	36.34%
Commercial Loan [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Concentrations of Loans as Percentage of Net Loans	59.50%
Accruing Loans 90 or More Days Past Due	$ 0	$ 0

XML

Income Tax Matters - Provision for Income Taxes and the Amounts Computed by Applying the Statutory Federal Income Tax Rate of 21% to Income Before Income Taxes (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Provision for income taxes and the amounts computed by applying the statutory federal income tax rate of 34% to income before income taxes
Tax computed at the statutory federal rate	$ 810	$ 642	$ 1,163
Increases (decrease) resulting from:
Tax exempt interest, net	(133)	(143)	(238)
State income taxes, net of federal benefit	65	80	71
Revalue of deferred tax assets			812
Other	29		1
Net provision for income taxes	$ 771	$ 579	$ 1,809	$ 895	$ 806

XML

Related Party Transactions - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2019	Dec. 31, 2018
The Strategic Alliance Corp [Member]
Related Party Transaction [Line Items]
Private placement offering amount	$ 4,100,000
Revenue from private placement	$ 202,250
Executive Officers and Directors [Member]
Related Party Transaction [Line Items]
Unused lines of credit		$ 1,300,000	$ 3,900,000
Deposits for related party		12,700,000	10,600,000
Subordinated debt		$ 1,100,000	$ 795,000

XML

Allowance for Loan Losses - Additional Information (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Receivables [Abstract]
Financing receivable recorded investment number of days past due	90 days
Non-performing loans	$ 2.9	$ 1.0

XML

Allowance for Loan Losses - Summary of Loans Deemed Impaired and Specific Reserves Allocated by Class (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	$ 6,835	$ 5,016	$ 6,107
Recorded Investment With No Allowance	2,923	1,092	2,802
Recorded Investment With Allowance	3,912	3,386	2,767
Related Allowance	141	154	194
Average Recorded Investment	5,496	5,266	5,767
Interest Income	314	205	263
Real Estate - Commercial [Member]
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	3,612	1,258	1,593
Recorded Investment With No Allowance	1,923	93	1,305
Recorded Investment With Allowance	1,689	1,165	288
Related Allowance	29	38	9
Average Recorded Investment	2,273	1,503	1,650
Interest Income	145	51	72
Other Real Estate Construction [Member]
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	44	632	689
Recorded Investment With No Allowance		47	101
Recorded Investment With Allowance	44	47	50
Related Allowance	3	4	3
Average Recorded Investment	64	132	208
Interest Income	3	3	5
Real Estate 1 - 4 Family Construction [Member]
Financing Receivable Impaired [Line Items]
Average Recorded Investment			3
Real Estate - Residential [Member]
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	3,070	3,005	3,701
Recorded Investment With No Allowance	987	901	1,319
Recorded Investment With Allowance	2,083	2,104	2,382
Related Allowance	99	110	171
Average Recorded Investment	3,010	3,505	3,762
Interest Income	159	145	179
Home Equity [Member]
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	82	83	35
Recorded Investment With No Allowance	13	51	22
Recorded Investment With Allowance	69	32	13
Related Allowance	10	1	1
Average Recorded Investment	116	54	66
Interest Income	5	3	1
Commercial Loan [Member]
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	4	7	44
Recorded Investment With No Allowance			10
Recorded Investment With Allowance	4	7	34
Related Allowance			10
Average Recorded Investment	6	32	25
Interest Income			2
Consumer Loans [Member]
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	23	31	45
Recorded Investment With No Allowance			45
Recorded Investment With Allowance	23	31
Related Allowance		1
Average Recorded Investment	27	40	53
Interest Income	$ 2	$ 3	$ 4

XML

Employee and Director Benefit Plans - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Defined Benefit Plan Disclosure [Line Items]
Associate minimum age to make elective deferrals	18 years
Associate minimum service period to make elective deferrals	30 days
Percentage of employee deferrals vested	100.00%
Annual contribution to plan	$ 446,228	$ 428,162	$ 361,936
Employee contributions	100.00%
Defined contribution plan, maximum annual contribution per employee for first compensation slab percentage	50.00%
Employee contributions benchmark	3.00%
2015 Stock Grant Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Percentage of share vested	100.00%
Number of shares granted	14,400	8,926	8,734
Share based compensation expenses	$ 72,000	$ 50,000	$ 50,000
Supplemental Executive Retirement Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Fixed monthly benefit payments	10 years
Provision expensed for benefits	$ 336,800	336,800	336,800
Liability accrued for compensation deferred under the plan	$ 4,700,000	4,400,000
Split-Dollar Life Insurance [Member]
Defined Benefit Plan Disclosure [Line Items]
Interest in cash surrender value of policies	100.00%
Expense income associated with policies	$ 13,107	1,846	$ 10,533
Liability associated with life insurance policies	$ 786,000	$ 773,000
Maximum [Member]
Defined Benefit Plan Disclosure [Line Items]
Employee contributions benchmark	5.00%
Employee contributions benchmark	3.00%

XML

Significant Accounting Policies - Computation of Weighted Average Shares Used in the Calculation of Basic and Dilutive Earnings Per Share (Detail) - shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Earnings Per Share [Abstract]
Weighted average number of common shares used in computing basic net income per common share	7,199,262	7,229,333	7,427,036
Effect of dilutive stock options			768
Weighted average number of common shares and dilutive potential common shares used in computing diluted net income per common share	7,199,262	7,229,333	7,427,804	7,531,470	7,634,024

XML

Investment Securities - Gross Unrealized Losses and Fair Value of Investments (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Gross unrealized losses, Less than Twelve Months, Fair Value	$ 31,263	$ 4,439
Available-for-sale Securities, Gross unrealized losses, Less than Twelve Months, Unrealized Losses	161	259
Available-for-sale Securities, Gross unrealized losses, Twelve Months or More, Fair Value	17,135	76,496
Available-for-sale Securities, Gross unrealized losses, Twelve Months or More, Unrealized Losses	227	2,010
Available-for-sale Securities, Gross unrealized losses, Fair Value	48,398	80,935
Available-for-sale Securities, Gross unrealized losses, Unrealized Losses	388	2,269
Held-to-maturity Securities, Gross unrealized losses, Less than Twelve Months, Fair Value	1,502	3,840
Held-to-maturity-Securities, Gross unrealized losses, Less than Twelve Months, Unrealized Losses	1	26
Held-to-maturity Securities, Gross unrealized losses, Twelve Months or More, Fair Value	0	6,000
Held-to-maturity Securities, Gross unrealized losses, Twelve Months or More, Unrealized Losses	0	67
Held-to-maturity Securities, Gross unrealized losses, Fair Value	1,502	9,840
Held-to-maturity Securities, Gross unrealized losses, Unrealized Losses	1	93
Corporate Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Gross unrealized losses, Less than Twelve Months, Fair Value		1,989
Available-for-sale Securities, Gross unrealized losses, Less than Twelve Months, Unrealized Losses		224
Available-for-sale Securities, Gross unrealized losses, Twelve Months or More, Fair Value		1,971
Available-for-sale Securities, Gross unrealized losses, Twelve Months or More, Unrealized Losses		41
Available-for-sale Securities, Gross unrealized losses, Fair Value		3,960
Available-for-sale Securities, Gross unrealized losses, Unrealized Losses		265
Held-to-maturity Securities, Gross unrealized losses, Less than Twelve Months, Fair Value	1,502	3,085
Held-to-maturity-Securities, Gross unrealized losses, Less than Twelve Months, Unrealized Losses	1	20
Held-to-maturity Securities, Gross unrealized losses, Twelve Months or More, Fair Value	0	0
Held-to-maturity Securities, Gross unrealized losses, Twelve Months or More, Unrealized Losses	0	0
Held-to-maturity Securities, Gross unrealized losses, Fair Value	1,502	3,085
Held-to-maturity Securities, Gross unrealized losses, Unrealized Losses	1	20
U.S. Government Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Gross unrealized losses, Less than Twelve Months, Fair Value	11,956	1,924
Available-for-sale Securities, Gross unrealized losses, Less than Twelve Months, Unrealized Losses	55	29
Available-for-sale Securities, Gross unrealized losses, Twelve Months or More, Fair Value	9,704	47,814
Available-for-sale Securities, Gross unrealized losses, Twelve Months or More, Unrealized Losses	146	1,037
Available-for-sale Securities, Gross unrealized losses, Fair Value	21,660	49,738
Available-for-sale Securities, Gross unrealized losses, Unrealized Losses	201	1,066
Held-to-maturity Securities, Gross unrealized losses, Twelve Months or More, Fair Value		843
Held-to-maturity Securities, Gross unrealized losses, Twelve Months or More, Unrealized Losses		12
Held-to-maturity Securities, Gross unrealized losses, Fair Value		843
Held-to-maturity Securities, Gross unrealized losses, Unrealized Losses		12
GSE - Mortgage-backed Securities and CMO's [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Gross unrealized losses, Less than Twelve Months, Fair Value	17,613	526
Available-for-sale Securities, Gross unrealized losses, Less than Twelve Months, Unrealized Losses	61	6
Available-for-sale Securities, Gross unrealized losses, Twelve Months or More, Fair Value	7,431	15,602
Available-for-sale Securities, Gross unrealized losses, Twelve Months or More, Unrealized Losses	81	509
Available-for-sale Securities, Gross unrealized losses, Fair Value	25,044	16,128
Available-for-sale Securities, Gross unrealized losses, Unrealized Losses	142	515
State and Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Gross unrealized losses, Less than Twelve Months, Fair Value	1,694
Available-for-sale Securities, Gross unrealized losses, Less than Twelve Months, Unrealized Losses	45
Available-for-sale Securities, Gross unrealized losses, Twelve Months or More, Fair Value		11,109
Available-for-sale Securities, Gross unrealized losses, Twelve Months or More, Unrealized Losses		423
Available-for-sale Securities, Gross unrealized losses, Fair Value	1,694	11,109
Available-for-sale Securities, Gross unrealized losses, Unrealized Losses	$ 45	423
Held-to-maturity Securities, Gross unrealized losses, Less than Twelve Months, Fair Value		755
Held-to-maturity-Securities, Gross unrealized losses, Less than Twelve Months, Unrealized Losses		6
Held-to-maturity Securities, Gross unrealized losses, Twelve Months or More, Fair Value		5,157
Held-to-maturity Securities, Gross unrealized losses, Twelve Months or More, Unrealized Losses		55
Held-to-maturity Securities, Gross unrealized losses, Fair Value		5,912
Held-to-maturity Securities, Gross unrealized losses, Unrealized Losses		$ 61

XML

Income Tax Matters - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2019	Dec. 31, 2017
Income Tax Disclosure [Abstract]
Statutory federal income tax rate		21.00%	35.00%
Tax Cuts and Jobs Act of 2017, reclassification from AOCI to retained earnings, tax effect			$ 155
Tax Cuts and Jobs Act of 2017, provisional income tax expense	$ 806

XML

Leases - Summary of Other Information Related to Operating Leases (Detail) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$ 357
ROU assets obtained in exchange for new operating lease liabilities	$ 1,945
Weighted-average remaining lease term - operating leases, in years	7 years 7 months 6 days
Weighted-average discount rate - operating leases	2.90%

XML

Loan Servicing Assets - Key Assumptions Used to Value Mortgage Servicing Rights (Detail)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Transfers And Servicing [Abstract]
Weighted average remaining life	261 months	259 months
Weighted average discount rate	12.00%	12.00%
Weighted average coupon	4.04%	4.02%
Weighted average prepayment speed	182.00%	132.00%

XML

Short Term-Borrowed Funds - Additional Information (Detail) $ in Millions	Dec. 31, 2019 USD ($)
Debt Disclosure [Abstract]
Federal Reserve discount	$ 47.2

XML

Leases - Schedule of Operating Lease Expense (Detail) $ in Thousands	Dec. 31, 2018 USD ($)
Leases Operating [Abstract]
2019	$ 345
2020	345
2021	306
2022	189
2023	189
Thereafter	812
Total	$ 2,186

XML

Troubled Debt Restructures - Schedule of Status of Types of Debt Restructuring (Detail) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) Contract Loan	Dec. 31, 2018 USD ($) Contract Loan	Dec. 31, 2017 USD ($) Contract Loan
Financing Receivable, Modifications [Line Items]
Number of Loans | Contract	5	6	10
Recorded Investments	$ 3,940	$ 3,500
Paid In Full [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | Loan	1	8	6
Recorded Investments	$ 37	$ 1,056	$ 217
Paying as Restructured [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | Loan	5	6	10
Recorded Investments	$ 1,940	$ 434	$ 863
Foreclosure/ Default [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | Loan		1	1
Recorded Investments		$ 242	$ 15
Other Loans [Member] | Paid In Full [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | Loan	1	8	6
Recorded Investments	$ 37	$ 1,056	$ 217
Other Loans [Member] | Paying as Restructured [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | Loan	5	6	10
Recorded Investments	$ 1,940	$ 434	$ 863
Other Loans [Member] | Foreclosure/ Default [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | Loan		1	1
Recorded Investments		$ 242	$ 15

XML

Significant Accounting Policies

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Significant Accounting Policies

Note 1 - Significant Accounting Policies

Nature of Business

Uwharrie Capital Corp (the “Company”) was incorporated under North Carolina law for the purpose of becoming the holding company for Bank of Stanly (“Stanly”). On July 1, 1993, Stanly became a wholly-owned subsidiary of the Company through a one-for-one exchange of the common stock of Stanly for common stock of the Company. On September 1, 2013, Bank of Stanly changed its name to Uwharrie Bank (“Uwharrie” or the “Bank”).

Uwharrie was incorporated on September 28, 1983, under the laws of the State of North Carolina and began operations on January 26, 1984 in Albemarle, North Carolina. Deposits with Uwharrie are insured by the Federal Deposit Insurance Corporation (“FDIC”). Uwharrie is under regulation of the Federal Reserve, the FDIC and the North Carolina Commissioner of Banks. In North Carolina, Uwharrie has ten branch locations that provide a wide range of deposit accounts, commercial, consumer, home equity and residential mortgage loans, safe deposit boxes and automated banking.

In 1987, Uwharrie established a wholly-owned subsidiary, BOS Agency, Inc. (“BOS Agency”), which engages in insurance product sales. In 1989, Uwharrie established a second wholly-owned subsidiary, BOS Financial Corporation, for the purpose of conducting business as a “broker dealer” in securities. During 1993, BOS Financial Corporation changed its name to The Strategic Alliance Corporation (“Strategic Alliance”) and was registered as a “broker dealer” and is regulated by the Financial Industry Regulatory Authority (“FINRA”).

The Company formed a new subsidiary, Strategic Investment Advisors, Inc. (“SIA”), during 1998 to provide investment advisory and asset management services. This subsidiary is registered as an investment advisor with the Securities and Exchange Commission. During 2015, SIA changed its name to Uwharrie Investment Advisors, Inc. (“UIA”).

On January 19, 2000, the Company completed its acquisition of Anson BanCorp, Inc. and its subsidiary, Anson Savings Bank. The savings bank retained its North Carolina savings bank charter and became a wholly-owned subsidiary of Uwharrie Capital Corp as Anson Bank & Trust Company (“Anson”), operating out of its main office branch in Wadesboro. Anson was consolidated into Uwharrie Bank effective September 1, 2013.

On August 4, 2000, Uwharrie acquired another subsidiary, Gateway Mortgage, Inc. (“Gateway”), a mortgage origination company. This company is currently inactive and does not affect the Company’s consolidated financial statements.

On April 10, 2003, the Company capitalized a new wholly-owned subsidiary bank, Cabarrus Bank & Trust Company (“Cabarrus”), located in Concord, North Carolina. As of that date, Cabarrus purchased two branch offices located in Cabarrus County from Uwharrie to begin its operation. Cabarrus operated as a commercial bank and provided a full range of banking services. Cabarrus was consolidated into Uwharrie Bank effective September 1, 2013.

On April 7, 2004 Uwharrie Mortgage, Inc. was established as a subsidiary of the Company to serve in the capacity of trustee and substitute trustee under deeds of trust.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, Uwharrie, UIA and Uwharrie’s subsidiaries, BOS Agency and Strategic Alliance. All significant intercompany transactions and balances have been eliminated in consolidation.

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.

Note 1 - Significant Accounting Policies (Continued)

Cash and Cash Equivalents

For the purpose of presentation in the consolidated statements of cash flows, cash and cash equivalents are defined as those amounts included in the balance sheet captions “Cash and due from banks” and “Interest-earning deposits with banks.”

Investment Securities Available for Sale

Investment securities available for sale consist of United States Treasuries, United States Government agencies, Government Sponsored Enterprise (GSE) mortgage backed securities and collateralized mortgage obligations (CMOs), corporate bonds and state and political subdivision bonds. Unrealized holding gains and losses on available for sale securities are reported as a net amount in other comprehensive income, net of income taxes. Gains and losses on the sale of available for sale securities are determined using the specific identification method and recorded on a trade basis. Declines in the fair value of individual available for sale securities below their cost that are other than temporary would result in write-downs of the individual securities, to their fair value. Such write-downs would be included in earnings as realized losses to the extent the losses are associated with the credit quality of the issuer. Amortization of premiums and accretion of discounts are recognized in interest income using the interest method over the period to maturity.

Investment Securities Held to Maturity

Investment securities held to maturity consist of United States Government agencies, corporate bonds and state and political subdivision bonds. The Company has both the intent and ability to hold the securities to maturity. These securities are reported at amortized cost.

Loans Held for Sale

Loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value in the aggregate. Net unrealized losses, if any, are recognized through a valuation allowance by charges to income.

Loans

The Company divides the loans it originates into two segments, commercial and noncommercial loans. Commercial loans are broken down into the following classes: commercial loans, real estate commercial loans and other real estate construction loans. Noncommercial loans are divided into the following classes: real estate 1-4 family construction, real estate 1-4 family residential loans, home equity loans, consumer loans and other loans. The ability of the Company’s borrowers to honor their contracts is largely dependent upon the real estate and general economic conditions in the Company’s market area. Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are reported at their outstanding unpaid principal balances adjusted for charge-offs, the allowance for loan losses, and any deferred fees or costs. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield using the effective interest method. The accrual of interest on mortgage and commercial loans is discontinued at the time the loan is 90 days delinquent unless the credit is well-secured and in process of collection. Credit card loans and other personal loans are typically charged off no later than 180 days past due. In all cases, loans are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful. The exception to this policy is credit card loans that remain in accrual status 90 days or more until they are paid current or charged off.

All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income. The interest on these impaired loans is accounted for on a cash basis until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Generally, a minimum of six months of sustained performance is required.

Allowance for Loan Losses

The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses. The provision for loan losses is expensed to earnings. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

Note 1 - Significant Accounting Policies (Continued)

The Company has different specific risks identified within the loan segments. Specific risks within the commercial loan segment arise with borrowers that are experiencing diminished operating cash flows, depreciated collateral values or prolonged sales and rental absorption periods. Concentrations within the portfolio, if unmanaged, pose additional risk. Occasionally, the Company will purchase participation loans from other institutions. If these loans are not independently underwritten by the Bank, they could carry additional risk. Generally, owner-occupied commercial real estate loans carry less risk than non-owner occupied. Specific risks within the non-commercial portfolio tend to be tied to economic factors including high unemployment and decreased real estate values. Risk to the Company is greater as home values deteriorate more rapidly than amortization in a loan, leaving little to no equity in properties, especially in junior lien positions. Concentration in the portfolio, such as home equity lines of credit, could pose additional risk if not appropriately managed.

The allowance for loan losses is evaluated both individually and collectively by loan class on a regular basis by management. Loans are collectively evaluated based upon management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. Individually evaluated loans are based upon discounted cash flows or the underlying value of the collateral. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. In addition, regulatory examiners may require the Company to recognize adjustments to the allowance for loan losses based on their judgment about information available to them at the time of their assessment.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for commercial and construction loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent. Homogeneous loans are collectively evaluated by loan class for impairment. However, once a loan is deemed impaired, it will be evaluated individually for specific impairment.

Troubled debt restructure loans (TDRs) are modifications of a loan when a borrower is experiencing financial difficulty and the modification involves providing a concession to the existing loan contract. TDRs are considered to be impaired loans and are individually evaluated for impairment.

The portion of the Company’s allowance for loan loss model related to general reserves captures the mean loss of individual loans within the loan portfolio and adds additional loss based on economic uncertainty and volatility. Specifically, the Company calculates probable losses on loans by computing a probability of loss and multiplying that by a loss given default derived from historical experience, thus deriving the estimated loss scenario by FDIC call report codes. Together, these components, as well as a reserve for qualitative factors based on management’s discretion of economic conditions and portfolio concentrations, form the basis of the allowance model. The loans that are impaired and included in the specific reserve are excluded from these calculations.

Loan Servicing Rights

The Company capitalizes mortgage and Small Business Administration (SBA) loan servicing rights when loans are sold and the loan servicing is retained. The amortization of servicing rights is realized over the estimated period that net servicing revenues are expected to be received. These projections are based on the amount and timing of estimated future cash flows. The amortization of servicing rights is recognized in the statement of income as an offset to other noninterest income. Servicing assets are periodically evaluated for impairment based upon their fair value. Fair value is based upon discounted cash flows using market-based assumptions. Impairment is recognized through a valuation allowance and charged to other expense.

Transfers of Financial Assets

Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Note 1 - Significant Accounting Policies (Continued)

Foreclosed Real Estate

Real estate properties acquired through foreclosure or other proceedings are initially recorded at fair value less costs to sell upon foreclosure, establishing a new cost basis. Annually, valuations are performed and the foreclosed property is adjusted to the lower of cost or fair value of the properties, less costs to sell. Any write-down at the time of transfer to foreclosed properties is charged to the allowance for loan losses. Subsequent write-downs are charged to noninterest expense, and costs related to the improvement of the property are capitalized if the fair value less cost to sell will allow it. If not, these costs are expensed also.

Premises and Equipment

Premises and equipment are stated at cost less accumulated depreciation. Land is carried at cost. Additions and major replacements or betterments which extend the useful lives of premises and equipment are capitalized. Maintenance, repairs and minor improvements are expensed as incurred. Depreciation is computed principally by the straight-line method over estimated useful lives, except in the case of leasehold improvements, which are amortized over the term of the leases, if shorter. Useful lives range from five to seven years for furniture, fixtures and equipment, to ten to thirty-nine years for leasehold improvements and buildings, respectively. Upon retirement or other disposition of the assets, the cost and the related accumulated depreciation are removed from the accounts and any gains or losses are reflected in income. ROU assets that are recognized at the initial adoption of a lease arrangement are included in premises and equipment. More information regarding ROU assets can be found in Note 8 (Leases).

Restricted Stock

As a requirement for membership, the Bank invests in the stock of the Federal Home Loan Bank of Atlanta (“FHLB”) and Federal Reserve Bank (“FRB”). These investments are carried at cost. Due to the redemption provisions of these investments, the Company estimated that fair value approximates cost and that this investment was not impaired.

Stock-Based Compensation

The Company recognizes the cost of employee services received in exchange for an award of equity instruments in the financial statements over the period the employee is required to perform the services in exchange for the award (presumptively the vesting period). Accounting Standards Codification (ASC) 718 also requires measurement of the cost of employee services received in exchange for an award based on the grant-date fair value of the award. As of December 31, 2019 and December 31, 2018, there are no outstanding awards.

Income Taxes

The Company and its subsidiaries file a consolidated federal income tax return and separate North Carolina income tax returns. The provision for income taxes in the accompanying consolidated financial statements is provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. We record uncertain tax positions in accordance with ASC 740 on the basis of a two-step process whereby (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold. The tax returns for the Company are subject to audit for the 2016 fiscal year and thereafter. It is the Company’s policy to recognize interest and penalties associated with uncertain tax positions as components of other expenses in the income statement; however, if interest becomes a material amount, it would be reclassified as interest expense. There were no interest or penalties accrued during the years ended December 31, 2019, 2018 and 2017.

Leases

Operating leases in which we are the lessee are recorded as operating lease ROU assets and operating lease liabilities, included in premises and equipment and other liabilities, respectively, on our consolidated balance sheet. We do not currently have any significant finance leases in which we are the lessee. Operating lease ROU assets represent our right to use an underlying asset during the lease term and operating lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and operating

Note 1 - Significant Accounting Policies (Continued)

lease liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents our incremental collateralized borrowing rate at the lease commencement date. ROU assets are further adjusted for the lease incentives. Operating lease expense, which is comprised of amortization of the ROU asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term, and is recorded in the net occupancy expense in the consolidated statement of income

Note 1 - Significant Accounting Policies (Continued)

Revenue Recognition

Under ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”, 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 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 recognize 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.

Fair Value of Financial Instruments

ASC 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 does not require any new fair value measurements, but clarifies and standardizes some divergent practices that have emerged since prior guidance was issued. ASC 820 creates a three-level hierarchy under which individual fair value estimates are to be ranked based on the relative reliability of the inputs used in the valuation.

ASC 820 defines fair value as the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, the Company considers the principal or most advantageous market in which those assets or liabilities are sold and considers assumptions that market participants would use when pricing those assets or liabilities. Fair values determined using Level 1 inputs rely on active and observable markets to price identical assets or liabilities. In situations where identical assets and liabilities are not traded in active markets, fair values may be determined based on Level 2 inputs, which exist when observable data exists for similar assets and liabilities. Fair values for assets and liabilities for which identical or similar assets and liabilities are not actively traded in observable markets are based on Level 3 inputs, which are considered to be unobservable.

Among the Company’s assets and liabilities, investment securities available for sale are reported at their fair values on a recurring basis. Certain other assets are adjusted to their fair value on a nonrecurring basis, including other real estate owned, impaired loans, loans held for sale, which are carried at the lower of cost or market; and loan servicing rights, where fair value is determined using similar assets with similar characteristics, when available, or based upon discounted cash flows using market-based assumptions. Deposits, short-term borrowings and long-term obligations are not reported at fair value.

Note 1 - Significant Accounting Policies (Continued)

Prices for US Treasury securities are readily available in the active markets in which those securities are traded, and the resulting fair values are shown in the “Level 1 input” column. Prices for government agency securities, mortgage-backed securities and for state, county and municipal securities are obtained for similar securities, and the resulting fair values are shown in the “Level 2 input” column. Prices for all other non-marketable investments are determined based on various assumptions that are not observable. The fair values for these investment securities are shown in the “Level 3 input” column. Non-marketable investment securities, which are carried at their purchase price, include those that may only be redeemed by the issuer.

The Company does not record loans at fair value on a recurring basis. However, from time to time, a loan is considered impaired and an allowance for loan losses is established. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as individually impaired, management measures impairment by using one of several methods including collateral value, fair value of similar debt or discounted cash flows. Those impaired loans not requiring an allowance represent loans for which the present value of the expected repayments or fair value of collateral exceed the recorded investments in such loans. The Company typically bases the fair value of the collateral on appraised values which the Company considers Level 3 valuations.

Foreclosed assets are adjusted to fair value upon transfer of the loans to other real estate owned. Real estate acquired in settlement of loans is recorded initially at the estimated fair value of the property less estimated selling costs at the date of foreclosure. The initial recorded value may be subsequently reduced by additional allowances, which are charged to earnings if the estimated fair value of the property less estimated selling costs declines below the initial recorded value. Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the collateral. The Company typically bases the fair value of the collateral on appraised values which the Company considers Level 3 valuations.

Loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value in the aggregate, based on secondary market prices. Net unrealized losses, if any, are recognized through a valuation allowance by charges to income. These loans are recorded in Level 2.

Note 1 - Significant Accounting Policies (Continued)

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 years ended December 31, 2019, 2018 and 2017:

	Year ended December 31,
	2019			2018			2017
	(dollars in thousands)
Beginning Balance	$	(1,694	)	$	(1,107	)	$	(1,318	)
Accumulated Other comprehensive income (loss) before reclassifications,    net of ($595), $171 and ($185)  tax effect, respectively		1,989			(587	)		356
Amounts reclassified from accumulated other comprehensive    income, net of ($7), $0, and ($4) tax effect,    respectively		28			—			10
Net current-period other comprehensive loss		2,017			(587	)		366
Tax Cuts and Jobs Act of 2017, reclassification from AOCI   to retained earnings, tax effect		—			—			(155	)
Ending Balance	$	323		$	(1,694	)	$	(1,107	)

Earnings per Common Share

The Company had no stock options outstanding at December 31, 2019 or December 31, 2018.

Basic earnings per share (“EPS”) excludes dilution and is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS 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 earnings of the entity. On November 12, 2019, the Company’s Board of Directors declared a 2% stock dividend payable on December 9, 2019 to shareholders of record on November 25, 2019. All information presented in the accompanying consolidated financial statements regarding earnings per share and weighted average number of shares outstanding has been computed giving effect to this stock dividend.

The computation of weighted average shares used in the calculation of basic and dilutive earnings per share is summarized below:

	2019		2018		2017
Weighted average number of common shares used in    computing basic net income per common share		7,199,262		7,229,333		7,427,036
Effect of dilutive stock options		—		—		768
Weighted average number of common shares and dilutive    potential common shares used in computing diluted net    income per common share		7,199,262		7,229,333		7,427,804

   Note 1 - Significant Accounting Policies (Continued)

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.

Recent Accounting Pronouncements

ASU 2016-02, “Leases, Topic 842” was adopted January 1, 2019. 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 previous 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 ROU 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. The impact of the new standard increased assets by $1.9 million and liabilities by $2.0 million, from the year ended December 31, 2018 to the year ended December 31, 2019. We currently have three properties that we operate with a lease term greater than one year.

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 twelve months ended December 31, 2019, gross interchange and card transaction fees totaled $2.0 million while related network costs totaled $1.2 million. On a net basis, we reported $826,000 as interchange and card transaction fees in the accompanying Consolidated Statement of Income for the twelve months ended December 31, 2019. For the twelve months ended December 31, 2018 and December 31, 2017, interchange and card transaction fees were $1.7 million and $1.6 million, respectively, on a gross basis while related network costs were $1.1 million and $913,000, respectively. As a result of the adoption of this standard, balances in prior years were re-classified to reflect the net presentation. In 2018 and 2017, interchange and card transaction fees, net were $648,000 and $656,000, respectively.

Note 1 - Significant Accounting Policies (Continued)

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. ASU 2016-13 requires an entity to utilize a new impairment model known as the current expected credit loss (“CECL”) model to estimate its lifetime “expected credit loss” and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. The CECL model is expected to result in earlier recognition of credit losses. ASU 2016-13 also requires new disclosures for financial assets measured at amortized cost, loans and available-for-sale debt securities. The updated guidance is effective for interim and annual reporting periods beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. During 2019, the effective date was extended to fiscal years ended on or after December 15, 2022 for public entities that qualify as smaller reporting companies, per the Securities Exchange Commission definition, which currently includes the Company. Entities will apply the standard’s provisions as a cumulative effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. We have entered into a contract to outsource our current model with a CECL-ready vendor. We are currently evaluating the various methods of determining credit losses within the software. The impact of the adoption is dependent on loan portfolio composition and credit quality at adoption date, as well as economic conditions and forecasts at that time.

From time to time the FASB issues exposure drafts of proposed statements of financial accounting standards. Such exposure drafts are subject to comment from the public, to revisions by the FASB and to final issuance by the FASB as statements of financial accounting standards. Management considers the effect of the proposed statements on the consolidated financial statements of the Company and monitors the status of changes to and proposed effective dates of exposure drafts.

Reclassification

Certain amounts in the 2018 and 2017 financial statements have been reclassified to conform to the 2019 presentation. These reclassifications do not have a material impact on net income or shareholders’ equity.

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Troubled Debt Restructures

12 Months Ended

Dec. 31, 2019

Receivables [Abstract]

Troubled Debt Restructures

Note 5 – Troubled Debt Restructures

A modification of a loan constitutes a troubled debt restructuring (“TDR”) when a borrower is experiencing financial difficulty and the modification involves providing a concession to the existing loan contract. The Company offers various types of concessions when modifying loans to troubled borrowers, however, forgiveness of principal is rarely granted. Concessions offered are term extensions, capitalizing accrued interest, reducing interest rates to below current market rates or a combination of any of these. Combinations from time to time may include allowing a customer to be placed on interest-only payments. The presentations below in the “other” category are TDRs with a combination of concessions. At the time of a TDR, additional collateral or a guarantor may be requested.

Loans modified as TDRs are typically already on nonaccrual status and in some cases, partial chargeoffs may have already been taken against the outstanding loan balance. The Company classifies TDR loans as impaired loans and evaluates the need for an allowance for loan loss on a loan-by-loan basis. An allowance is based on either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price or the estimated fair value of the underlying collateral less any selling costs, if the loan is deemed to be collateral dependent.

For the twelve months ended December 31, 2019, 2018 and 2017, the following table presents a breakdown of the types of concessions made by loan class:

	Year Ended December 31, 2019
			Pre-Modification		Post-Modification
	Number		Outstanding Recorded		Outstanding Recorded
	of Contracts		Investment		Investment
			(dollars in thousands)
Extend payment terms:
Commercial		—	$	—	$	—
Real estate - commercial		—		—		—
Other real estate construction		—		—		—
Real estate 1 – 4 family construction		—		—		—
Real estate – residential		—		—		—
Home equity		—		—		—
Consumer loans		—		—		—
Other loans		—		—		—
		—	$	—	$	—
Other:
Commercial		1	$	50	$	4
Real estate - commercial		1		1,629		838
Other real estate construction		—		—		—
Real estate 1 – 4 family construction		—		—		—
Real estate – residential		3		261		219
Home equity		—		—		—
Consumer loans		—		—		—
Other loans		—		—		—
		5	$	1,940	$	1,061
Total		5	$	1,940	$	1,061

Note 5 – Troubled Debt Restructures (Continued)

	Year Ended December 31, 2018
			Pre-Modification		Post-Modification
	Number		Outstanding Recorded		Outstanding Recorded
	of Contracts		Investment		Investment
			(dollars in thousands)
Extend payment terms:
Commercial		—	$	—	$	—
Real estate - commercial		—		—		—
Other real estate construction		—		—		—
Real estate 1 – 4 family construction		—		—		—
Real estate – residential		—		—		—
Home equity		—		—		—
Consumer loans		—		—		—
Other loans		—		—		—
		—	$	—	$	—
Other:
Commercial		—	$	—	$	—
Real estate - commercial		—		—		—
Other real estate construction		—		—		—
Real estate 1 – 4 family construction		—		—		—
Real estate – residential		6		434		387
Home equity		—		—		—
Consumer loans		—		—		—
Other loans		—		—		—
		6	$	434	$	387
Total		6	$	434	$	387

	Year Ended December 31, 2017
			Pre-Modification		Post-Modification
	Number		Outstanding Recorded		Outstanding Recorded
	of Contracts		Investment		Investment
			(dollars in thousands)
Extend payment terms:
Commercial		—	$	—	$	—
Real estate - commercial		—		—		—
Other real estate construction		—		—		—
Real estate 1 – 4 family construction		—		—		—
Real estate – residential		—		—		—
Home equity		—		—		—
Consumer loans		—		—		—
Other loans		—		—		—
		—	$	—	$	—
Other:
Commercial		1	$	12	$	10
Real estate - commercial		2		178		173
Other real estate construction		—		—		—
Real estate 1 – 4 family construction		—		—		—
Real estate – residential		6		708		675
Home equity		—		—		—
Consumer loans		1		9		5
Other loans		—		—		—
		10	$	907	$	863
Total		10	$	907	$	863

Note 5 – Troubled Debt Restructures (Continued)

During the twelve months ended December 31, 2019, there was one TDR for which there was a payment default. There was one payment default in 2018 and one payment default on a TDR in 2017. The outstanding balance of TDRs at December 31, 2019 is $3.94 million with $3.91 million still accruing compared to an outstanding balance at December 31, 2018 of $3.5 million with $3.4 million still accruing.

A default on a troubled debt restructure is defined as being past due 90 days or being out of compliance with the modification agreement. As previously mentioned, the Company considers TDRs to be impaired loans and has $117,000 in the allowance for loan loss as of December 31, 2019, as a direct result of these TDRs. At December 31, 2018 and 2017 there was $144,000 and $171,000 in the allowance for loan loss related to TDRs, respectively.

The following table presents the successes and failures of the types of modifications within the previous twelve months as of December 31, 2019, 2018 and 2017:

	Paid In Full				Paying as restructured				Converted to nonaccrual				Foreclosure/ Default
	Number of		Recorded		Number of		Recorded		Number of		Recorded		Number of		Recorded
	Loans		Investments		Loans		Investments		Loans		Investments		Loans		Investments
	(dollars in thousands)
December 31, 2019
Extended payment terms		—	$	—		—	$	—		—	$	—		—	$	—
Other		1		37		5		1,940		—		—		—		—
Total		1	$	37		5	$	1,940		—	$	—		—	$	—

	Paid In Full				Paying as restructured				Converted to nonaccrual				Foreclosure/ Default
	Number of		Recorded		Number of		Recorded		Number of		Recorded		Number of		Recorded
	Loans		Investments		Loans		Investments		Loans		Investments		Loans		Investments
	(dollars in thousands)
December 31, 2018
Extended payment terms		—	$	—		—	$	—		—	$	—		—	$	—
Other		8		1,056		6		434		—		—		1		242
Total		8	$	1,056		6	$	434		—	$	—		1	$	242

	Paid In Full				Paying as restructured				Converted to nonaccrual				Foreclosure/ Default
	Number of		Recorded		Number of		Recorded		Number of		Recorded		Number of		Recorded
	Loans		Investments		Loans		Investments		Loans		Investments		Loans		Investments
	(dollars in thousands)
December 31, 2017
Extended payment terms		—	$	—		—	$	—		—	$	—		—	$	—
Other		6		217		10		863		—		—		1		15
Total		6	$	217		10	$	863		—	$	—		1	$	15

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Deposits

12 Months Ended

Dec. 31, 2019

Banking And Thrift [Abstract]

Deposits

Note 9 - Deposits

The composition of deposits at December 31, 2019 and 2018 is as follows:

	2019					2018
	Amount		Percentage of Total			Amount		Percentage of Total
	(dollars in thousands)
Demand noninterest-bearing	$	150,283		26	%	$	129,714		23	%
Interest checking and money market		263,136		45	%		324,391		57	%
Savings		57,136		10	%		54,784		10	%
Time deposits $250,000 and over		55,682		9	%		7,920		1	%
Other time deposits		59,641		10	%		50,092		9	%
Total	$	585,878		100	%	$	566,901		100	%

The maturities of fixed-rate time deposits at December 31, 2019 are reflected in the table below:

	Time Deposits		Other
Year ending December 31,	$250,000 and Over		Time Deposits
	(dollars in thousands)
2020		53,866		39,650
2021		1,507		15,522
2022		309		2,977
2023		—		610
2024		—		882
Thereafter		—		—
Total	$	55,682	$	59,641

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Premises and Equipment (Tables)

12 Months Ended

Dec. 31, 2019

Property Plant And Equipment [Abstract]

Major Classes of Premises and Equipment and the Total Accumulated Depreciation

The major classes of premises and equipment and the total accumulated depreciation at December 31, 2019 and 2018 are listed below:

	2019		2018
	(dollars in thousands)
Land	$	3,192	$	3,215
Building and improvements		15,783		15,150
ROU assets		1,945		—
Furniture and equipment		8,518		8,808
Total fixed assets		29,438		27,173
Less accumulated depreciation		12,376		12,373
Net fixed assets	$	17,062	$	14,800

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Loans Held for Investment (Tables)

12 Months Ended

Dec. 31, 2019

Receivables [Abstract]

Composition of Net Loans Held for Investment by Class

The composition of net loans held for investment by class as of December 31, 2019 and 2018 is as follows:

	2019			2018
	(dollars in thousands)
Commercial
Commercial	$	59,075		$	57,176
Real estate - commercial		130,998			130,634
Other real estate construction loans		23,043			31,141
Noncommercial
Real estate 1-4 family construction		7,600			7,805
Real estate - residential		71,370			76,564
Home equity		51,216			52,541
Consumer loans		12,957			12,159
Other loans		1,939			2,110
		358,198			370,130
Less:
Allowance for loan losses		(1,981	)		(2,374	)
Deferred loan fees, net		(248	)		(160	)
Loans held for investment, net	$	355,969		$	367,596

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Investment Securities - Carrying Amounts and Fair Values of Securities Available for Sale and Held to Maturity (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost	$ 88,105	$ 93,499
Available-for-sale Securities, Gross Unrealized Gains	807	69
Available-for-sale Securities, Gross Unrealized Losses	388	2,269
Available-for-sale Securities, Fair Value	88,524	91,299
Held-to-maturity Securities, Amortized Cost	13,428	10,837
Held-to-maturity Securities, Gross Unrealized Gains	72	6
Held-to-maturity Securities, Gross Unrealized Losses	1	93
Held-to-maturity Securities, Fair Value	13,499	10,750
U.S. Treasury [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost	4,976	4,944
Available-for-sale Securities, Gross Unrealized Gains	36	11
Available-for-sale Securities, Fair Value	5,012	4,955
U.S. Government Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost	25,869	52,935
Available-for-sale Securities, Gross Unrealized Gains	18	47
Available-for-sale Securities, Gross Unrealized Losses	201	1,066
Available-for-sale Securities, Fair Value	25,686	51,916
Held-to-maturity Securities, Amortized Cost	578	855
Held-to-maturity Securities, Gross Unrealized Gains	5
Held-to-maturity Securities, Gross Unrealized Losses		12
Held-to-maturity Securities, Fair Value	583	843
GSE - Mortgage-backed Securities and CMO's [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost	38,305	17,217
Available-for-sale Securities, Gross Unrealized Gains	413
Available-for-sale Securities, Gross Unrealized Losses	142	515
Available-for-sale Securities, Fair Value	38,576	16,702
State and Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost	13,937	13,373
Available-for-sale Securities, Gross Unrealized Gains	329	5
Available-for-sale Securities, Gross Unrealized Losses	45	423
Available-for-sale Securities, Fair Value	14,221	12,955
Held-to-maturity Securities, Amortized Cost	6,826	6,877
Held-to-maturity Securities, Gross Unrealized Gains	62	6
Held-to-maturity Securities, Gross Unrealized Losses		61
Held-to-maturity Securities, Fair Value	6,888	6,822
Corporate Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost	5,018	5,030
Available-for-sale Securities, Gross Unrealized Gains	11	6
Available-for-sale Securities, Gross Unrealized Losses		265
Available-for-sale Securities, Fair Value	5,029	4,771
Held-to-maturity Securities, Amortized Cost	6,024	3,105
Held-to-maturity Securities, Gross Unrealized Gains	5
Held-to-maturity Securities, Gross Unrealized Losses	1	20
Held-to-maturity Securities, Fair Value	$ 6,028	$ 3,085

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Investment Securities - Amortized Cost and Fair Value of Available for Sale Securities Portfolio (Detail) $ in Thousands	Dec. 31, 2019 USD ($)
Investments Debt And Equity Securities [Abstract]
Due within one year, Amortized Cost	$ 7,784
Due after one but within five years, Amortized Cost	22,502
Due after five but within ten years, Amortized Cost	8,310
Due after ten years, Amortized Cost	11,204
Mortgage backed securities, Amortized Cost	38,305
Available-for-sale Securities, Amortized Cost	88,105
Due within one year, Estimated Fair Value	7,827
Due after one but within five years, Estimated Fair Value	22,496
Due after five but within ten years, Estimated Fair Value	8,163
Due after ten years, Estimated Fair Value	11,462
Mortgage backed securities, Estimated Fair Value	38,576
Fair Value	$ 88,524

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Loan Servicing Assets - Estimated Amortization Expense (Detail) - Mortgage Servicing Assets [Member] - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Finite-Lived Intangible Assets [Line Items]
2020	$ 406
2021	352
2022	298
2023	243
2024	188
Thereafter	236
Total	$ 1,723	$ 1,850	$ 2,125	$ 2,271

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Short-Term Borrowed Funds - Summary of Short-Term Borrowed Funds (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Short-term Debt [Line Items]
Short-term borrowed funds, balance at year end	$ 626,000	$ 1,190,000
Short-term borrowed funds, weighted average rates at year end	0.89%	1.49%
Short-term borrowed funds, average balance during year	$ 906,000	$ 1,640,000
Short-term borrowed funds, weighted average rate during year	1.62%	1.00%
Federal Funds Purchased [Member]
Short-term Debt [Line Items]
Short-term borrowed funds, average balance during year	$ 2,000	$ 2,000
Short-term borrowed funds, weighted average rate during year	3.04%	2.92%
Master Notes and Other Short Term Borrowing [Member]
Short-term Debt [Line Items]
Short-term borrowed funds, balance at year end	$ 626,000	$ 1,190,000
Short-term borrowed funds, weighted average rates at year end	0.89%	1.49%
Short-term borrowed funds, average balance during year	$ 904,000	$ 1,638,000
Short-term borrowed funds, weighted average rate during year	1.61%	1.00%
Short-term borrowed funds, maximum month-end balance	$ 1,486,000	$ 2,006,000

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Leases - Schedule of Maturities of Lease Expense (Detail) $ in Thousands	Dec. 31, 2019 USD ($)
Operating Lease Liabilities Payments Due [Abstract]
2020	$ 381
2021	347
2022	225
2023	229
2024	233
Thereafter	846
Total lease payments	2,261
Less: Interest	(249)
Operating Lease, Liability	$ 2,012

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Troubled Debt Restructures - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2019 USD ($) Contract	Dec. 31, 2018 USD ($) Contract	Dec. 31, 2017 USD ($) Contract
Receivables [Abstract]
Number of TDR's payment default | Contract	1	1	1
Outstanding balance of TDRs	$ 3,940,000	$ 3,500,000
Outstanding balance of TDRs still accruing	$ 3,910,000	3,400,000
TDR is defined as being past due	90 days
Allowance for loan loss on TDR	$ 117,000	$ 144,000	$ 171,000

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Income Tax Matters - Significant Components of Income Tax Expense (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Current tax expense:
Federal	$ 662	$ 524	$ 1,022
State	94	94	96
Total	756	618	1,118
Deferred tax expense:
Federal	26	(47)	680
State	(11)	8	11
Total	15	(39)	691
Net provision for income taxes	$ 771	$ 579	$ 1,809	$ 895	$ 806

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Leases - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2019 USD ($) Branch OfficeLocation	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Lessee Lease Description [Line Items]
Number of office locations leased | OfficeLocation	3
Number of branch locations leased | Branch	2
Lessee, Operating Lease, Existence of Option to Extend [true false]	true
Description of option to extend	Certain lease arrangements contain extension options which range from five to ten years at the then fair market rental rates.
Operating Lease, Liability	$ 2,012,000
Rental expense related to the operating leases		$ 339,782	$ 155,575
ASU 2016-02 [Member]
Lessee Lease Description [Line Items]
Operating Lease, Right-of-Use Asset	1,900,000
Operating Lease, Liability	2,000,000
Rental expense related to the operating leases	$ 371,327	$ 339,782	$ 155,757
Minimum [Member]
Lessee Lease Description [Line Items]
Operating leases remaining term	2 years
Option to extend term	5 years
Maximum [Member]
Lessee Lease Description [Line Items]
Operating leases remaining term	10 years
Option to extend term	10 years

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Short-Term Borrowed Funds

12 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

Short-Term Borrowed Funds

Note 10 - Short-Term Borrowed Funds

The following tables set forth certain information regarding the amounts, year-end weighted average rates, average balances, weighted average rate, and maximum month-end balances for short-term borrowed funds, at and during 2019 and 2018:

	2019					2018
	Amount		Rate			Amount		Rate
	(dollars in thousands)
At year-end
Master notes and other short-term borrowing	$	626		0.89	%	$	1,190		1.49	%
Notes payable		—		—			—		—
Short-term line of credit		—		—			—		—
	$	626		0.89	%	$	1,190		1.49	%

	2019					2018
	Amount		Rate			Amount		Rate
	(dollars in thousands)
Average for the year
Federal funds purchased	$	2		3.04	%	$	2		2.92	%
Master notes and other short-term borrowing		904		1.61	%		1,638		1.00	%
Notes payable		—		—			—		—
Short-term line of credit		—		—			—		—
	$	906		1.62	%	$	1,640		1.00	%

Note 10 - Short-Term Borrowed Funds (Continued)

	2019		2018
	(dollars in thousands)
Maximum month-end balance
Federal funds purchased		—		—
Master notes and other short-term borrowing		1,486		2,006

Master notes and other secured borrowings represent an overnight investment in commercial paper issued by the Company to customers of its subsidiary bank, where an agreement is in place.

The subsidiary bank has combined available lines of credit for federal funds and Federal Reserve discount window availability in the amount of $47.2 million at December 31, 2019.

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Investment Securities

12 Months Ended

Dec. 31, 2019

Investments Debt And Equity Securities [Abstract]

Investment Securities

Note 2 - Investment Securities

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

December 31, 2019	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(dollars in thousands)
Securities available for sale
U.S. Treasury	$	4,976	$	36	$	—	$	5,012
U.S. Government agencies		25,869		18		201		25,686
GSE - Mortgage-backed securities and CMO’s		38,305		413		142		38,576
State and political subdivisions		13,937		329		45		14,221
Corporate bonds		5,018		11		—		5,029
Total securities available for sale	$	88,105	$	807	$	388	$	88,524

December 31, 2019	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(dollars in thousands)
Securities held to maturity
U.S. Government agencies	$	578	$	5	$	—	$	583
State and political subdivisions		6,826		62		—		6,888
Corporate bonds		6,024		5		1		6,028
Total securities held to maturity	$	13,428	$	72	$	1	$	13,499

Note 2 - Investment Securities (Continued)

December 31, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(dollars in thousands)
Securities available for sale
U.S. Treasury	$	4,944	$	11	$	—	$	4,955
U.S. Government agencies		52,935		47		1,066		51,916
GSE - Mortgage-backed securities and CMO’s		17,217		—		515		16,702
State and political subdivisions		13,373		5		423		12,955
Corporate bonds		5,030		6		265		4,771
Total securities available for sale	$	93,499	$	69	$	2,269	$	91,299

December 31, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(dollars in thousands)
Securities held to maturity
U.S. Government agencies	$	855	$	—	$	12	$	843
State and political subdivisions		6,877		6		61		6,822
Corporate bonds		3,105		—		20		3,085
Total securities held to maturity	$	10,837	$	6	$	93	$	10,750

At both December 31, 2019 and December 31, 2018, the Company owned Federal Reserve Bank stock reported at cost of $509,000. Also, at December 31, 2019 and December 31, 2018, the Company owned Federal Home Loan Bank (“FHLB”) stock of $635,000 and $585,000, respectively. The investments in Federal Reserve stock and FHLB stock are required investments related to the Company’s membership in, and borrowings with, these banks and classified as restricted stock on the consolidated balance sheet. These investments are carried at cost since there is no ready market and redemption has historically been made at par value. The Company estimated the fair value approximated cost and that these investments were not impaired at December 31, 2019.

Results from sales of securities available for sale for the years ended December 31, 2019, 2018 and 2017 are as follows:

	2019			2018		2017
	(dollars in thousands)
Gross proceeds from sales	$	3,351		$	—	$	8,918
Realized gains from sales	$	—		$	—	$	—
Realized losses from sales		(35	)		—		(14	)
Net realized gains (losses)	$	(35	)	$	—	$	(14	)

At December 31, 2019 and 2018 securities available for sale with a carrying amount of $65.3 million and $71.5 million, respectively, were pledged as collateral on public deposits and for other purposes as required or permitted by law.

Note 2 - Investment Securities (Continued)

The following tables show the gross unrealized losses and fair value of investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2019 and December 31, 2018. We believe these unrealized losses on investment securities are a result of a volatile market and fluctuations in market prices due to a rise in interest rates, which will adjust if rates decline. Management does not believe these fluctuations are a reflection of the credit quality of the investments. At December 31, 2019, the unrealized losses on available for sale securities less than twelve months related to three government agency bonds, six government sponsored enterprise (GSE) mortgage backed securities and one state and political subdivision bond. The Company had four government agency bonds and nine GSE mortgage backed securities that had been in a loss position twelve months or more at December 31, 2019. At December 31, 2018, the unrealized losses on held to maturity securities less than twelve months related to one corporate bond. At December 31, 2018, the unrealized loss on available for sale securities less than twelve months related to four government agency bonds, one GSE mortgage backed security and one corporate bond. The Company had sixteen government agency bonds, sixteen GSE mortgage backed securities, one corporate bond and eight state and political subdivision bonds that had been in a loss position for more than twelve months at December 31, 2018. The unrealized losses on held to maturity securities related to two corporate bonds and two state and political subdivision bonds.

December 31, 2019	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(dollars in thousands)
Securities available for sale temporary impairment
U.S. Gov’t agencies		11,956		55		9,704		146		21,660		201
GSE-Mortgage-backed securities and CMO’s		17,613		61		7,431		81		25,044		142
State and political		1,694		45		—		—		1,694		45
Total securities available for sale	$	31,263	$	161	$	17,135	$	227	$	48,398	$	388

December 31, 2019	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(dollars in thousands)
Held to maturity temporary impairment
Corporate bonds		1,502		1		—		—		1,502		1
Total securities held to maturity	$	1,502	$	1	$	—	$	—	$	1,502	$	1

December 31, 2018	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(dollars in thousands)
Securities available for sale temporary impairment
U.S. Gov’t agencies		1,924		29		47,814		1,037		49,738		1,066
GSE-Mortgage-backed securities and CMO’s		526		6		15,602		509		16,128		515
State and political		—		—		11,109		423		11,109		423
Corporate bonds		1,989		224		1,971		41		3,960		265
Total securities available for sale	$	4,439	$	259	$	76,496	$	2,010	$	80,935	$	2,269

Note 2 - Investment Securities (Continued)

December 31, 2018	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(dollars in thousands)
Held to maturity temporary impairment
U.S. Gov’t agencies	$	—	$	—	$	843	$	12	$	843	$	12
State and political		755		6		5,157		55		5,912		61
Corporate bonds		3,085		20		—		—		3,085		20
Total securities held to maturity	$	3,840	$	26	$	6,000	$	67	$	9,840	$	93

Declines in the fair value of the investment portfolio are believed by management to be temporary in nature. When evaluating an investment for other-than-temporary impairment, management considers, among other things, the length of time and the extent to which the fair value has been in a loss position, the financial condition of the issuer and the intent and the ability of the Company to hold the investment until the loss position is recovered.

Any unrealized losses were largely due to increases in market interest rates over the yields available at the time of purchase. The fair value is expected to recover as the bonds approach their maturity date or market yields for such investments decline. Management does not believe any of the securities are impaired due to reasons of credit quality, but that the losses are temporary in nature. At December 31, 2019, the Company does not intend to sell and is not likely to be required to sell the available for sale securities that were in a loss position prior to full recovery.

The following tables show contractual maturities of the investment portfolio as of December 31, 2019:

	Amortized Cost		Estimated Fair Value
	(dollars in thousands)
Securities available for sale
Due within one year	$	7,784	$	7,827
Due after one but within five years		22,502		22,496
Due after five but within ten years		8,310		8,163
Due after ten years		11,204		11,462
Mortgage backed securities		38,305		38,576
	$	88,105	$	88,524

	Amortized Cost		Estimated Fair Value
	(dollars in thousands)
Securities held to maturity
Due within one year	$	4,525	$	4,530
Due after one but within five years		4,975		5,040
Due after five but within ten years		3,928		3,929
	$	13,428	$	13,499

The mortgage-backed securities are shown separately as they are not due at a single maturity date.

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Loan Servicing Assets

12 Months Ended

Dec. 31, 2019

Mortgage Banking [Abstract]

Loan Servicing Assets

Note 6 – Loan Servicing Assets

The principal balance of loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balances of mortgage and other loans serviced for others were approximately $419.4 million and $418.6 million at December 31, 2019 and 2018, respectively. The carrying value of capitalized servicing rights, net of valuation allowances, is included in other assets. A summary of loan servicing rights follows:

	2019			2018			2017
	(dollars in thousands)
Beginning of year servicing rights:	$	1,850		$	2,125		$	2,271
Amounts capitalized		694			388			587
Amortization		(821	)		(663	)		(733	)
Impairment		—			—			—
End of year	$	1,723		$	1,850		$	2,125

Note 6 – Loan Servicing Assets (Continued)

Amortization expense is estimated as follows:

Year ending December 31,
(dollars in thousands)
2020	$	406
2021		352
2022		298
2023		243
2024		188
Thereafter		236
Total	$	1,723

The amortization does not anticipate or pro-forma loan prepayments.

The fair value of mortgage servicing rights was $3.1 million and $3.5 million at December 31, 2019 and 2018, respectively. The key assumptions used to value mortgage servicing rights were as follows:

	2019			2018
Weighted average remaining life	261 months			259 months
Weighted average discount rate		12	%		12	%
Weighted average coupon		4.04	%		4.02	%
Weighted average prepayment speed		182	%		132	%

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Loan Servicing Assets (Tables)

12 Months Ended

Dec. 31, 2019

Mortgage Banking [Abstract]

Summary of Mortgage Servicing Rights

A summary of loan servicing rights follows:

	2019			2018			2017
	(dollars in thousands)
Beginning of year servicing rights:	$	1,850		$	2,125		$	2,271
Amounts capitalized		694			388			587
Amortization		(821	)		(663	)		(733	)
Impairment		—			—			—
End of year	$	1,723		$	1,850		$	2,125

Estimated Amortization Expense

Amortization expense is estimated as follows:

Year ending December 31,
(dollars in thousands)
2020	$	406
2021		352
2022		298
2023		243
2024		188
Thereafter		236
Total	$	1,723

Key Assumptions Used to Value Mortgage Servicing Rights

The key assumptions used to value mortgage servicing rights were as follows:

	2019			2018
Weighted average remaining life	261 months			259 months
Weighted average discount rate		12	%		12	%
Weighted average coupon		4.04	%		4.02	%
Weighted average prepayment speed		182	%		132	%

XML

Investment Securities (Tables)

12 Months Ended

Dec. 31, 2019

Investments Debt And Equity Securities [Abstract]

Carrying Amounts and Fair Values of Securities Available for Sale and Held to Maturity

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

December 31, 2019	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(dollars in thousands)
Securities available for sale
U.S. Treasury	$	4,976	$	36	$	—	$	5,012
U.S. Government agencies		25,869		18		201		25,686
GSE - Mortgage-backed securities and CMO’s		38,305		413		142		38,576
State and political subdivisions		13,937		329		45		14,221
Corporate bonds		5,018		11		—		5,029
Total securities available for sale	$	88,105	$	807	$	388	$	88,524

December 31, 2019	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(dollars in thousands)
Securities held to maturity
U.S. Government agencies	$	578	$	5	$	—	$	583
State and political subdivisions		6,826		62		—		6,888
Corporate bonds		6,024		5		1		6,028
Total securities held to maturity	$	13,428	$	72	$	1	$	13,499

Note 2 - Investment Securities (Continued)

December 31, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(dollars in thousands)
Securities available for sale
U.S. Treasury	$	4,944	$	11	$	—	$	4,955
U.S. Government agencies		52,935		47		1,066		51,916
GSE - Mortgage-backed securities and CMO’s		17,217		—		515		16,702
State and political subdivisions		13,373		5		423		12,955
Corporate bonds		5,030		6		265		4,771
Total securities available for sale	$	93,499	$	69	$	2,269	$	91,299

December 31, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(dollars in thousands)
Securities held to maturity
U.S. Government agencies	$	855	$	—	$	12	$	843
State and political subdivisions		6,877		6		61		6,822
Corporate bonds		3,105		—		20		3,085
Total securities held to maturity	$	10,837	$	6	$	93	$	10,750

Sales of Securities Available for Sale

Results from sales of securities available for sale for the years ended December 31, 2019, 2018 and 2017 are as follows:

	2019			2018		2017
	(dollars in thousands)
Gross proceeds from sales	$	3,351		$	—	$	8,918
Realized gains from sales	$	—		$	—	$	—
Realized losses from sales		(35	)		—		(14	)
Net realized gains (losses)	$	(35	)	$	—	$	(14	)

Gross Unrealized Losses and Fair Value of Investments

The unrealized losses on held to maturity securities related to two corporate bonds and two state and political subdivision bonds.

December 31, 2019	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(dollars in thousands)
Securities available for sale temporary impairment
U.S. Gov’t agencies		11,956		55		9,704		146		21,660		201
GSE-Mortgage-backed securities and CMO’s		17,613		61		7,431		81		25,044		142
State and political		1,694		45		—		—		1,694		45
Total securities available for sale	$	31,263	$	161	$	17,135	$	227	$	48,398	$	388

December 31, 2019	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(dollars in thousands)
Held to maturity temporary impairment
Corporate bonds		1,502		1		—		—		1,502		1
Total securities held to maturity	$	1,502	$	1	$	—	$	—	$	1,502	$	1

December 31, 2018	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(dollars in thousands)
Securities available for sale temporary impairment
U.S. Gov’t agencies		1,924		29		47,814		1,037		49,738		1,066
GSE-Mortgage-backed securities and CMO’s		526		6		15,602		509		16,128		515
State and political		—		—		11,109		423		11,109		423
Corporate bonds		1,989		224		1,971		41		3,960		265
Total securities available for sale	$	4,439	$	259	$	76,496	$	2,010	$	80,935	$	2,269

Note 2 - Investment Securities (Continued)

December 31, 2018	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(dollars in thousands)
Held to maturity temporary impairment
U.S. Gov’t agencies	$	—	$	—	$	843	$	12	$	843	$	12
State and political		755		6		5,157		55		5,912		61
Corporate bonds		3,085		20		—		—		3,085		20
Total securities held to maturity	$	3,840	$	26	$	6,000	$	67	$	9,840	$	93

Amortized Cost and Fair Value of Available for Sale Securities Portfolio

The following tables show contractual maturities of the investment portfolio as of December 31, 2019:

	Amortized Cost		Estimated Fair Value
	(dollars in thousands)
Securities available for sale
Due within one year	$	7,784	$	7,827
Due after one but within five years		22,502		22,496
Due after five but within ten years		8,310		8,163
Due after ten years		11,204		11,462
Mortgage backed securities		38,305		38,576
	$	88,105	$	88,524

Amortized Cost and Fair Value of Held to Maturity Securities Portfolio

	Amortized Cost		Estimated Fair Value
	(dollars in thousands)
Securities held to maturity
Due within one year	$	4,525	$	4,530
Due after one but within five years		4,975		5,040
Due after five but within ten years		3,928		3,929
	$	13,428	$	13,499

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Selected Financial Data - Summary of Quarterly Financial Information (Parenthetical) (Details)	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Quarterly Financial Information Disclosure [Abstract]
Adjusted stock dividend	2.00%	2.00%	2.00%	2.00%

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Parent Company Financial Data - Condensed Balance Sheets (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
ASSETS
Cash and demand deposits	$ 7,520	$ 4,473
Interest-earning deposits	147,678	113,461
Investments in:
Other assets	10,852	11,905
Total assets	656,793	632,304	$ 577,253	$ 548,230	$ 532,202
Liabilities and shareholders’ equity
Short term debt	626	1,190
Long-term debt	9,992	9,974
Other liabilities	11,384	9,048
Total liabilities	607,935	587,129
Shareholders’ equity	38,203	34,520
Total liabilities and shareholders’ equity	656,793	632,304
Number of Common Shares Issued [Member]
ASSETS
Cash and demand deposits	526	287
Interest-earning deposits	1,589	1,256
Investments in:
Bank subsidiaries	45,770	43,042
Nonbank subsidiaries	381	450
Other assets	2,073	1,638
Total assets	50,339	46,673
Liabilities and shareholders’ equity
Master notes	626	1,190
Long-term debt	9,992	9,974
Other liabilities	1,518	989
Total liabilities	12,136	12,153
Shareholders’ equity	38,203	34,520
Total liabilities and shareholders’ equity	$ 50,339	$ 46,673

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Related Party Transactions

12 Months Ended

Dec. 31, 2019

Related Party Transactions [Abstract]

Related Party Transactions

Note 14 - Related Party Transactions

The Company has granted loans to certain directors and executive officers and their related interests. Such loans are made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other borrowers and, in management’s opinion, do not involve more than the normal risk of collectability. All loans to directors and executive officers or their related interests are submitted to the Board of Directors for approval. A summary of loans to directors, executive officers and their related interests follows:

	2019			2018
	(dollars in thousands)
Balance, at beginning of the year	$	9,284		$	8,692
Disbursements during the year		4,833			1,902
Collections during the year		(3,822	)		(1,310	)
Balance, at end of the year	$	10,295		$	9,284

At December 31, 2019, the Company had approved, but unused lines of credit, totaling $1.3 million to executive officers and directors, and their related interests, compared to $3.9 million at December 31, 2018. In addition, at December 31, 2019, the Company had $12.7 million of deposits for executive officers and directors, and their related interest compared to $10.6 million at December 31, 2018. In addition to deposits and loans, certain directors have been issued the subordinated debt of the Company. The amount of related interest in the Company’s subordinated debt in 2019 is $1.1 million compared to $795,000 at December 31, 2018.

During 2017, the Company’s broker-dealer subsidiary (The Strategic Alliance Corp) brokered a private placement offering in the amount of $4.1 million, producing revenue in 2017 of $202,250. Certain officers and directors of the Bank were involved with the transaction as investors in the private placement.

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Fair Values of Financial Instruments and Interest Rate Risk

12 Months Ended

Dec. 31, 2019

Investments All Other Investments [Abstract]

Fair Values of Financial Instruments and Interest Rate Risk

Note 18 - Fair Values of Financial Instruments and Interest Rate Risk

ASC 825, “Disclosures about Fair Value of Financial Instruments,” requires disclosure of the fair value of financial assets and financial liabilities, including those that are not measured and reported at fair value on a recurring basis or non-recurring basis.

The fair value estimates presented at December 31, 2019 and December 31, 2018, are based on relevant market information and information about the financial instruments. Fair value estimates are intended to represent the price an asset could be sold at or the price a liability could be settled for. However, given there is no active market or observable market transactions for many of the Company’s financial instruments, the Company has made estimates of many of these fair values which are subjective in nature, involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimated values. The estimated fair values disclosed in the following table do not represent market values of all assets and liabilities of the Company and should not be interpreted to represent the underlying value of the Company. The following table reflects a comparison of carrying amounts and the estimated fair value of the financial instruments as of December 31, 2019 and December 31, 2018:

	Carrying		Estimated
December 31, 2019	Value		Fair Value		Level 1		Level 2		Level 3
	(dollars in thousands)
FINANCIAL ASSETS
Cash and cash equivalents	$	155,198	$	117,938	$	115,693	$	2,245	$	—
Securities available for sale		88,524		88,524		5,012		83,512		—
Securities held to maturity		13,428		13,499		—		10,499		3,000
Loans held for investment, net		355,969		354,269		—		—		354,269
Loans held for sale		2,946		2,946		—		2,946		—
Restricted stock		1,144		1,144		1,144		—		—
Loan servicing rights		1,723		3,228		—		3,228		—
Accrued interest receivable		1,666		1,666		—		—		1,666
FINANCIAL LIABILITIES
Deposits	$	585,878		567,130	$	—	$	567,130	$	—
Short-term borrowings		626		626		—		626		—
Long-term debt		9,992		10,180		—		—		10,180
Accrued interest payable		55		55		—		—		55

Note 18 - Fair Values of Financial Instruments and Interest Rate Risk (Continued)

	Carrying		Estimated
December 31, 2018	Value		Fair Value		Level 1		Level 2		Level 3
	(dollars in thousands)
FINANCIAL ASSETS
Cash and cash equivalents	$	117,934	$	117,901	$	115,693	$	2,208	$	—
Securities available for sale		91,299		91,299		4,955		86,344		—
Securities held to maturity		10,837		10,750		—		10,750		—
Loans held for investment, net		367,596		364,636		—		—		364,636
Loans held for sale		4,800		4,800		—		4,800		—
Restricted stock		1,094		1,094		1,094		—		—
Mortgage servicing rights		1,850		3,455		—		3,455		—
Accrued interest receivable		1,763		1,763		—		—		1,763
FINANCIAL LIABILITIES
Deposits	$	566,901	$	521,508	$	—	$	521,508	$	—
Short-term borrowings		1,190		1,190		—		1,190		—
Long-term debt		9,974		10,086		—		—		10,086
Accrued interest payable		16		16		—		—		16

At December 31, 2019, the subsidiary bank had outstanding standby letters of credit and commitments to extend credit. These off-balance sheet financial instruments are generally exercisable at the market rate prevailing at the date the underlying transaction will be completed. The fair value is not material. See Note 13.

Note 18 - Fair Values of Financial Instruments and Interest Rate Risk (Continued)

The following table provides fair value information for assets and liabilities measured at fair value on a recurring basis as of December 31, 2019 and 2018:

	December 31, 2019
	(dollars in thousands)
	Total		Level 1		Level 2		Level 3
Securities available for sale:
US Treasury	$	5,012	$	5,012	$	—	$	—
US Government		25,686		—		25,686		—
Mortgage-backed securities and CMO’s		38,576		—		38,576		—
State and political subdivisions		14,221		—		14,221		—
Corporate bonds		5,029		—		5,029		—
Total assets at fair value	$	88,524	$	5,012	$	83,512	$	—
Total liabilities at fair value	$	—	$	—	$	—	$	—

	December 31, 2018
	(dollars in thousands)
	Total		Level 1		Level 2		Level 3
Securities available for sale:
US Treasury	$	4,955	$	4,955	$	—	$	—
US Government		51,916		—		51,916		—
Mortgage-backed securities and CMO’s		16,702		—		16,702		—
State and political subdivisions		12,955		—		12,955		—
Corporate bonds		4,771		—		4,771		—
Total assets at fair value	$	91,299	$	4,955	$	86,344	$	—
Total liabilities at fair value	$	—	$	—	$	—	$	—

The Company may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis in accordance with U.S. generally accepted accounting principles. These include assets that are measured at the lower of cost or market that were recognized at fair value below cost at the end of the period. Assets re-measured at fair value during the period are included in the table below as of December 31, 2019 and December 31, 2018:

	December 31, 2019
	(dollars in thousands)
	Total		Level 1		Level 2		Level 3
Impaired loans	$	3,771	$	—	$	—	$	3,771
Other real estate owned		364		—		—		364
Total assets at fair value	$	4,135	$	—	$	—	$	4,135
Total liabilities at fair value	$	—	$	—	$	—	$	—

	December 31, 2018
	(dollars in thousands)
	Total		Level 1		Level 2		Level 3
Impaired loans	$	3,279	$	—	$	—	$	3,279
Other real estate owned		951		—		—		951
Total assets at fair value	$	4,230	$	—	$	—	$	4,230
Total liabilities at fair value	$	—	$	—	$	—	$	—

Quantitative Information about Level 3 Fair Value Measurements

Note 18 - Fair Values of Financial Instruments and Interest Rate Risk (Continued)

			General
December 31, 2019	Valuation Technique	Unobservable Input	Range
Nonrecurring measurements:
Impaired loans	Discounted appraisals	Collateral discounts and Estimated costs to sell	0 – 25%
	Discounted cash flows	Discount rates	4%-8.75%
OREO	Discounted appraisals	Collateral discounts and Estimated costs to sell	0 – 10%

			General
December 31, 2018	Valuation Technique	Unobservable Input	Range
Nonrecurring measurements:
Impaired loans	Discounted appraisals	Collateral discounts and Estimated costs to sell	0 – 25%
	Discounted cash flows	Discount rates	4%-8.75%
OREO	Discounted appraisals	Collateral discounts and Estimated costs to sell	0 – 10%

At December 31, 2019 and 2018, impaired loans were being evaluated with discounted expected cash flows for performing TDRs and discounted appraisals were being used on collateral dependent loans.

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Consolidated Statements of Income - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Interest Income
Loans, including fees	$ 18,977,000	$ 18,205,000	$ 16,569,000
Investment securities
US Treasury	131,000	45,000	28,000
US Government agencies and corporations	1,490,000	1,405,000	1,507,000
State and political subdivisions non-taxable	408,000	434,000	439,000
State and political subdivisions taxable	59,000	47,000	47,000
Interest-earning deposits with banks and federal funds sold	2,702,000	1,737,000	750,000
Total interest income	23,767,000	21,873,000	19,340,000
Interest Expense
Interest checking and money market accounts	1,435,000	948,000	413,000
Savings deposits	102,000	91,000	49,000
Time deposits $250,000 and over	830,000	69,000	67,000
Other time deposits	620,000	204,000	185,000
Short-term borrowed funds	15,000	16,000	16,000
Long-term debt	563,000	554,000	547,000
Total interest expense	3,565,000	1,882,000	1,277,000
Net interest income	20,202,000	19,991,000	18,063,000
Provision for (recovery of) loan losses	(588,000)	90,000	(236,000)
Net interest income after provision for (recovery of) loan losses	20,790,000	19,901,000	18,299,000
Noninterest Income
Service charges on deposit accounts	1,348,000	1,220,000	1,169,000
Gain (loss) on sale of securities (includes reclassification of $35, $0 and $14 from accumulated comprehensive income in 2019, 2018 and 2017, respectively)	(35,000)		(14,000)
Income from mortgage loan sales	3,835,000	2,980,000	3,345,000
Other income	344,000	810,000	595,000
Total noninterest income	9,005,000	8,279,000	8,425,000
Noninterest Expense
Salaries and employee benefits	17,122,000	16,180,000	14,710,000
Net occupancy expense	1,693,000	1,616,000	1,261,000
Equipment expense	720,000	734,000	597,000
Data processing costs	706,000	923,000	1,000,000
Loan cost	359,000	306,000	356,000
Foreclosed real estate expense	300,000	45,000	293,000
Professional fees and services	929,000	1,058,000	723,000
Marketing and donations	758,000	786,000	977,000
Electronic banking expense	424,000	401,000	362,000
Software amortization and maintenance	925,000	924,000	787,000
FDIC insurance	132,000	234,000	229,000
Other noninterest expense	1,869,000	1,917,000	2,009,000
Total noninterest expense	25,937,000	25,124,000	23,304,000
Income before income taxes	3,858,000	3,056,000	3,420,000
Income taxes (includes reclassification of ($7), $0 and ($4) from accumulated other comprehensive income, respectively)	771,000	579,000	1,809,000
Net income	3,087,000	2,477,000	1,611,000
Less: Net income attributable to noncontrolling interest	(564,000)	(570,000)	(592,000)
Net income attributable to Uwharrie Capital Corp and common shareholders	$ 2,523,000	$ 1,907,000	$ 1,019,000
Net income per common share
Basic	$ 0.35	$ 0.26	$ 0.14
Diluted	$ 0.35	$ 0.26	$ 0.14
Weighted average common shares outstanding
Basic	7,199,262	7,229,333	7,427,036
Diluted	7,199,262	7,229,333	7,427,804
Other Services and Commissions [Member]
Noninterest Income
Noninterest income fees	$ 2,687,000	$ 2,621,000	$ 2,674,000
Interchange and Card Transaction Fees, Net [Member]
Noninterest Income
Noninterest income fees	$ 826,000	$ 648,000	$ 656,000

XML

Consolidated Statements of Changes in Shareholders' Equity (Parenthetical)	Dec. 31, 2019	Dec. 31, 2018	Nov. 12, 2018	Dec. 31, 2017
Statement Of Stockholders Equity [Abstract]
Stock dividend, percentage	2.00%	2.00%	2.00%	2.00%

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Fair Values of Financial Instruments and Interest Rate Risk (Tables)

12 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

Comparison of Carrying Amounts and Estimated Fair Value of Financial Instruments

The following table reflects a comparison of carrying amounts and the estimated fair value of the financial instruments as of December 31, 2019 and December 31, 2018:

	Carrying		Estimated
December 31, 2019	Value		Fair Value		Level 1		Level 2		Level 3
	(dollars in thousands)
FINANCIAL ASSETS
Cash and cash equivalents	$	155,198	$	117,938	$	115,693	$	2,245	$	—
Securities available for sale		88,524		88,524		5,012		83,512		—
Securities held to maturity		13,428		13,499		—		10,499		3,000
Loans held for investment, net		355,969		354,269		—		—		354,269
Loans held for sale		2,946		2,946		—		2,946		—
Restricted stock		1,144		1,144		1,144		—		—
Loan servicing rights		1,723		3,228		—		3,228		—
Accrued interest receivable		1,666		1,666		—		—		1,666
FINANCIAL LIABILITIES
Deposits	$	585,878		567,130	$	—	$	567,130	$	—
Short-term borrowings		626		626		—		626		—
Long-term debt		9,992		10,180		—		—		10,180
Accrued interest payable		55		55		—		—		55

	Carrying		Estimated
December 31, 2018	Value		Fair Value		Level 1		Level 2		Level 3
	(dollars in thousands)
FINANCIAL ASSETS
Cash and cash equivalents	$	117,934	$	117,901	$	115,693	$	2,208	$	—
Securities available for sale		91,299		91,299		4,955		86,344		—
Securities held to maturity		10,837		10,750		—		10,750		—
Loans held for investment, net		367,596		364,636		—		—		364,636
Loans held for sale		4,800		4,800		—		4,800		—
Restricted stock		1,094		1,094		1,094		—		—
Mortgage servicing rights		1,850		3,455		—		3,455		—
Accrued interest receivable		1,763		1,763		—		—		1,763
FINANCIAL LIABILITIES
Deposits	$	566,901	$	521,508	$	—	$	521,508	$	—
Short-term borrowings		1,190		1,190		—		1,190		—
Long-term debt		9,974		10,086		—		—		10,086
Accrued interest payable		16		16		—		—		16

Fair Value Information for Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table provides fair value information for assets and liabilities measured at fair value on a recurring basis as of December 31, 2019 and 2018:

	December 31, 2019
	(dollars in thousands)
	Total		Level 1		Level 2		Level 3
Securities available for sale:
US Treasury	$	5,012	$	5,012	$	—	$	—
US Government		25,686		—		25,686		—
Mortgage-backed securities and CMO’s		38,576		—		38,576		—
State and political subdivisions		14,221		—		14,221		—
Corporate bonds		5,029		—		5,029		—
Total assets at fair value	$	88,524	$	5,012	$	83,512	$	—
Total liabilities at fair value	$	—	$	—	$	—	$	—

	December 31, 2018
	(dollars in thousands)
	Total		Level 1		Level 2		Level 3
Securities available for sale:
US Treasury	$	4,955	$	4,955	$	—	$	—
US Government		51,916		—		51,916		—
Mortgage-backed securities and CMO’s		16,702		—		16,702		—
State and political subdivisions		12,955		—		12,955		—
Corporate bonds		4,771		—		4,771		—
Total assets at fair value	$	91,299	$	4,955	$	86,344	$	—
Total liabilities at fair value	$	—	$	—	$	—	$	—

Assets Re-Measured at Fair Value

Assets re-measured at fair value during the period are included in the table below as of December 31, 2019 and December 31, 2018:

	December 31, 2019
	(dollars in thousands)
	Total		Level 1		Level 2		Level 3
Impaired loans	$	3,771	$	—	$	—	$	3,771
Other real estate owned		364		—		—		364
Total assets at fair value	$	4,135	$	—	$	—	$	4,135
Total liabilities at fair value	$	—	$	—	$	—	$	—

	December 31, 2018
	(dollars in thousands)
	Total		Level 1		Level 2		Level 3
Impaired loans	$	3,279	$	—	$	—	$	3,279
Other real estate owned		951		—		—		951
Total assets at fair value	$	4,230	$	—	$	—	$	4,230
Total liabilities at fair value	$	—	$	—	$	—	$	—

Quantitative Information about Level 3 Fair Value Measurements

Quantitative Information about Level 3 Fair Value Measurements

			General
December 31, 2019	Valuation Technique	Unobservable Input	Range
Nonrecurring measurements:
Impaired loans	Discounted appraisals	Collateral discounts and Estimated costs to sell	0 – 25%
	Discounted cash flows	Discount rates	4%-8.75%
OREO	Discounted appraisals	Collateral discounts and Estimated costs to sell	0 – 10%

			General
December 31, 2018	Valuation Technique	Unobservable Input	Range
Nonrecurring measurements:
Impaired loans	Discounted appraisals	Collateral discounts and Estimated costs to sell	0 – 25%
	Discounted cash flows	Discount rates	4%-8.75%
OREO	Discounted appraisals	Collateral discounts and Estimated costs to sell	0 – 10%

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Income Tax Matters (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Significant Components of Income Tax Expense (Benefit)

The significant components of income tax expense for the years ended December 31, 2019, 2018 and 2017 are summarized as follows:

	2019			2018			2017
	(dollars in thousands)
Current tax expense:
Federal	$	662		$	524		$	1,022
State		94			94			96
Total		756			618			1,118
Deferred tax expense:
Federal		26			(47	)		680
State		(11	)		8			11
Total		15			(39	)		691
Net provision for income taxes	$	771		$	579		$	1,809

Provision for Income Taxes and the Amounts Computed by Applying the Statutory Federal Income Tax Rate of 34% to Income Before Income Taxes

The difference between the provision for income taxes and the amounts computed by applying the statutory federal income tax rate of 21% to income before income taxes is summarized below:

	2019			2018			2017
	(dollars in thousands)
Tax computed at the statutory federal rate	$	810		$	642		$	1,163
Increases (decrease) resulting from:
Tax exempt interest, net		(133	)		(143	)		(238	)
State income taxes, net of federal benefit		65			80			71
Revalue of deferred tax assets		—			—			812
Other		29			—			1
Provision for income taxes	$	771		$	579		$	1,809

Significant Components of Deferred Taxes

Significant components of deferred taxes at December 31, 2019, 2018 and 2017 are as follows:

	2019			2018			2017
	(dollars in thousands)
Deferred tax assets relating to:
Allowance for loan losses	$	478		$	545		$	569
Deferred compensation		1,078			1,012			936
Other		89			104			173
Lease liability		462			—			—
Net unrealized loss on securities available for sale		—			505			335
Total deferred tax assets		2,107			2,166			2,013
Deferred tax liabilities relating to:
Net unrealized gain on securities available for sale		(96	)		—			—
Premises and equipment		(184	)		(159	)		(213	)
Deferred loans fees and costs		(159	)		(163	)		(148	)
Loan servicing		(92	)		(99	)		(116	)
ROU asset		(447	)		—			—
Total deferred tax liabilities		(978	)		(421	)		(477	)
Net recorded deferred tax asset	$	1,129		$	1,745		$	1,536

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Troubled Debt Restructures - Breakdown of Types of Concessions Made by Loan Class (Detail) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) Contract	Dec. 31, 2018 USD ($) Contract	Dec. 31, 2017 USD ($) Contract
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contract	5	6	10
Pre-Modification Outstanding Recorded Investment	$ 1,940	$ 434	$ 907
Post-Modification Outstanding Recorded Investment	$ 1,061	$ 387	$ 863
Other Payment Terms [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contract	5	6	10
Pre-Modification Outstanding Recorded Investment	$ 1,940	$ 434	$ 907
Post-Modification Outstanding Recorded Investment	$ 1,061	$ 387	$ 863
Other Payment Terms [Member] | Commercial Loan [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contract	1		1
Pre-Modification Outstanding Recorded Investment	$ 50		$ 12
Post-Modification Outstanding Recorded Investment	$ 4		$ 10
Other Payment Terms [Member] | Consumer Loans [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contract			1
Pre-Modification Outstanding Recorded Investment			$ 9
Post-Modification Outstanding Recorded Investment			$ 5
Other Payment Terms [Member] | Real Estate - Commercial [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contract	1		2
Pre-Modification Outstanding Recorded Investment	$ 1,629		$ 178
Post-Modification Outstanding Recorded Investment	$ 838		$ 173
Other Payment Terms [Member] | Real Estate - Residential [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contract	3	6	6
Pre-Modification Outstanding Recorded Investment	$ 261	$ 434	$ 708
Post-Modification Outstanding Recorded Investment	$ 219	$ 387	$ 675

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Fair Values of Financial Instruments and Interest Rate Risk - Comparison of Carrying Amounts and Estimated Fair Value of Financial Instruments (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
FINANCIAL ASSETS
Securities available for sale	$ 88,524	$ 91,299
Securities held to maturity	13,499	10,750
Loans held for investment, net	355,969	367,596
Accrued interest receivable	1,666	1,763
FINANCIAL LIABILITIES
Long-term debt	9,992	9,974
Accrued interest payable	55	16
Carrying Value [Member]
FINANCIAL ASSETS
Cash and cash equivalents	155,198	117,934
Securities available for sale	88,524	91,299
Securities held to maturity	13,428	10,837
Loans held for investment, net	355,969	367,596
Loans held for sale	2,946	4,800
Restricted stock	1,144	1,094
Fair value of mortgage servicing rights	1,723	1,850
Accrued interest receivable	1,666	1,763
FINANCIAL LIABILITIES
Deposits	585,878	566,901
Short-term borrowings	626	1,190
Long-term debt	9,992	9,974
Accrued interest payable	55	16
Estimated Fair Value [Member]
FINANCIAL ASSETS
Cash and cash equivalents	117,938	117,901
Securities available for sale	88,524	91,299
Securities held to maturity	13,499	10,750
Loans held for investment, net	354,269	364,636
Loans held for sale	2,946	4,800
Restricted stock	1,144	1,094
Fair value of mortgage servicing rights	3,228	3,455
Accrued interest receivable	1,666	1,763
FINANCIAL LIABILITIES
Deposits	567,130	521,508
Short-term borrowings	626	1,190
Long-term debt	10,180	10,086
Accrued interest payable	55	16
Level 1 [Member]
FINANCIAL ASSETS
Cash and cash equivalents	115,693	115,693
Securities available for sale	5,012	4,955
Restricted stock	1,144	1,094
Level 2 [Member]
FINANCIAL ASSETS
Cash and cash equivalents	2,245	2,208
Securities available for sale	83,512	86,344
Securities held to maturity	10,499	10,750
Loans held for sale	2,946	4,800
Fair value of mortgage servicing rights	3,228	3,455
FINANCIAL LIABILITIES
Deposits	567,130	521,508
Short-term borrowings	626	1,190
Level 3 [Member]
FINANCIAL ASSETS
Securities held to maturity	3,000
Loans held for investment, net	354,269	364,636
Accrued interest receivable	1,666	1,763
FINANCIAL LIABILITIES
Long-term debt	10,180	10,086
Accrued interest payable	$ 55	$ 16

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Allowance for Loan Losses - Changes in Allowance for Loan Losses (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Financing Receivable Allowance For Credit Losses [Line Items]
Balance, beginning of year	$ 2,374	$ 2,458	$ 2,707
Provision (recovery) charged to operations	(588)	90	(236)	$ (88)	$ (620)
Charge-offs	(160)	(326)	(208)
Recoveries	441	152	195
Net (charge-offs) recoveries	281	(174)	(13)
Other	(86)
Balance, end of year	1,981	2,374	2,458	2,707
Commercial [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Balance, beginning of year	1,334	1,401	1,404
Provision (recovery) charged to operations	(571)	132	(72)
Charge-offs	(11)	(245)	(31)
Recoveries	367	46	100
Net (charge-offs) recoveries	356	(199)	69
Other	(32)
Balance, end of year	1,087	1,334	1,401	1,404
Non-Commercial [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Balance, beginning of year	1,040	1,057	1,303
Provision (recovery) charged to operations	(17)	(42)	(164)
Charge-offs	(149)	(81)	(177)
Recoveries	74	106	95
Net (charge-offs) recoveries	(75)	25	(82)
Other	(54)
Balance, end of year	$ 894	$ 1,040	$ 1,057	$ 1,303

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Income Tax Matters - Significant Components of Deferred Taxes (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Deferred tax assets relating to:
Allowance for loan losses	$ 478	$ 545	$ 569
Deferred compensation	1,078	1,012	936
Other	89	104	173
Lease liability	462
Net unrealized loss on securities available for sale		505	335
Total deferred tax assets	2,107	2,166	2,013
Deferred tax liabilities relating to:
Net unrealized gain on securities available for sale	(96)
Premises and equipment	(184)	(159)	(213)
Deferred loans fees and costs	(159)	(163)	(148)
Loan servicing	(92)	(99)	(116)
ROU asset	(447)
Total deferred tax liabilities	(978)	(421)	(477)
Net recorded deferred tax asset	$ 1,129	$ 1,745	$ 1,536

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Shareholders' Equity and Regulatory Matters - Additional Information (Detail) - USD ($)	1 Months Ended	12 Months Ended
	Jan. 31, 2013	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2013	Sep. 30, 2019
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Reserve on deposit liabilities		$ 4,900,000
Long-term debt		$ 9,992,000	$ 9,974,000
Shares repurchased during period		168,683	138,629	75,709
Junior Subordinated Debt [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Fixed rate junior subordinated debt securities per security						$ 1,000
Minimum investment required under private placement						$ 50,000
Long-term debt		$ 10,000,000
Debt securities final maturity date		Sep. 30, 2029
Debt instrument earliest redemption date		Sep. 30, 2024
Interest rate of private placement		5.25%
Final maturity drops period		5 years
Percentage of proceeds from sale of securities imposed as reduction		20.00%
Preferred Stock Series B [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Issued	$ 7,900,000
Dividends rate	5.30%
Sale	$ 7,900,000
Total issuance costs	$ 113,000
Voting rights		The preferred stock has no voting rights
Preferred Stock Series C [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Issued					$ 2,800,000
Dividends rate					5.30%
Sale					$ 2,800,000
Total issuance costs					$ 23,000
Voting rights		The preferred stock has no voting rights
Basel III [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
capital to risk-weighted assets		8.00%
Tier 1 leverage ratio		4.00%
capital conservation buffer risk-weighted assets		0.625%
capital conservation buffer risk-weighted assets addition per year		0.625%
capital conservation buffer risk-weighted assets, 2019		2.50%
capital conservation buffer risk-weighted assets end date		Jan. 01, 2016
Basel III [Member] | Minimum [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
common equity Tier 1 capital to risk-weighted assets		4.50%
Tier 1 capital to risk-weighted asset		6.00%

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Allowance for Loan Losses - Composition of Nonaccrual Loans by Class (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Financing Receivable Impaired [Line Items]
Increase in non-performing loans	$ 3,536	$ 2,174
Real Estate - Commercial [Member]
Financing Receivable Impaired [Line Items]
Increase in non-performing loans	2,088	273
Other Real Estate Construction [Member]
Financing Receivable Impaired [Line Items]
Increase in non-performing loans	14	47
Real Estate - Residential [Member]
Financing Receivable Impaired [Line Items]
Increase in non-performing loans	1,078	1,496
Home Equity [Member]
Financing Receivable Impaired [Line Items]
Increase in non-performing loans	139	218
Commercial Loan [Member]
Financing Receivable Impaired [Line Items]
Increase in non-performing loans	190	54
Consumer Loans [Member]
Financing Receivable Impaired [Line Items]
Increase in non-performing loans	27	86
Loans 90 Days or More Past Due and Non - Accrual [Member]
Financing Receivable Impaired [Line Items]
Increase in non-performing loans	2,922	1,044
Loans 90 Days or More Past Due and Non - Accrual [Member] | Real Estate - Commercial [Member]
Financing Receivable Impaired [Line Items]
Increase in non-performing loans	2,088	273
Loans 90 Days or More Past Due and Non - Accrual [Member] | Other Real Estate Construction [Member]
Financing Receivable Impaired [Line Items]
Increase in non-performing loans	0	47
Loans 90 Days or More Past Due and Non - Accrual [Member] | Real Estate - Residential [Member]
Financing Receivable Impaired [Line Items]
Increase in non-performing loans	752	606
Loans 90 Days or More Past Due and Non - Accrual [Member] | Home Equity [Member]
Financing Receivable Impaired [Line Items]
Increase in non-performing loans	$ 82	$ 118