0001193125-26-093397
SEC filingUwharrie Capital Corp reported net income of $11.4 million for FY 2025, an increase of $1.4 million from $9.9 million in FY 2024. Net income available to common shareholders was $10.8 million ($1.49 per share), up from $9.3 million ($1.26 per share) in the prior year. Key drivers included a $2.9 million increase in net interest income to $38.9 million, driven by a 13 basis point improvement in interest rate spread to 2.86%, and a $1.5 million increase in noninterest income to $11.3 million, primarily from mortgage banking. Total assets grew $67.5 million to $1.20 billion, with loans held for investment increasing 3.5% to $689.6 million and deposits growing 4.9% to $1.08 billion. The company maintained strong capital ratios, exceeding regulatory requirements, and improved its net interest margin to 3.50% from 3.40%.
Uwharrie Capital Corp reported strong financial results for FY 2025, with net income increasing 14.1% to $11.4 million from $9.9 million in FY 2024. Net income available to common shareholders rose to $10.8 million ($1.49 per share) from $9.3 million ($1.26 per share). The company's total assets grew $67.5 million to $1.20 billion, driven by a $23.2 million increase in loans held for investment (3.5% growth) and a $20.0 million increase in investment securities (5.5% growth). Customer deposits increased $50.5 million to $1.08 billion, representing 4.9% growth. The company maintained strong capital positions, exceeding all regulatory requirements, with total shareholders' equity increasing $17.9 million to $75.6 million.
Net interest income, the primary revenue component, increased $2.9 million to $38.9 million, driven by a 13 basis point improvement in interest rate spread to 2.86%. The average yield on interest-earning assets increased 4 basis points to 5.19%, while the average rate paid for interest-bearing liabilities decreased 10 basis points to 2.33%. Noninterest income grew 15.6% to $11.3 million, primarily due to a $1.1 million increase in mortgage banking income, positive market value adjustments on supplemental executive retirement plans totaling $293,000, and a $325,000 increase in other service fees and commissions. The loan portfolio composition showed commercial loans at $110.1 million (15.98% of total), real estate-commercial at $255.9 million (37.15%), real estate-residential at $231.8 million (33.66%), and real estate-construction at $76.7 million (11.14%).
The net interest margin improved to 3.50% from 3.40% in the prior year. Income before income taxes was $14.6 million, with income tax expense of $3.2 million resulting in an effective tax rate of 22.26%. Noninterest expense increased $2.4 million to $34.8 million, primarily due to a $1.6 million increase in salaries and employee benefits (from $20.8 million to $22.4 million) driven by wage increases and higher mortgage production commissions. The provision for credit losses was $726,000, compared to $528,000 in the prior year, with net loan charge-offs of $160,000 versus $270,000 in FY 2024.
Net cash provided by operating activities was $9.9 million, while investing activities used $36.1 million primarily for loan growth ($23.5 million increase) and securities purchases. Financing activities provided $47.3 million, mainly from deposit growth ($50.5 million increase). Cash and cash equivalents increased $21.1 million to $114.6 million. The allowance for credit losses on loans was $6.4 million (0.93% of total loans), up from $5.8 million (0.87%) in the prior year. Nonperforming assets totaled $378,000, with nonaccrual loans representing 0.05% of total loans. The company maintained strong liquidity with interest-earning cash and cash equivalents of $59.3 million (8.6% of total loans held for investment).
The company's strategic initiatives focus on revenue diversification beyond net interest income, with mortgage banking showing strong growth. Management noted that the company is more asset-sensitive and may experience negative impact to earnings should interest rates decrease, but could benefit from increasing rates. The allowance for credit losses methodology was adjusted during Q2 2025, increasing qualitative factors from 0.12% to 0.40% of loans. The company declared a 3.0% stock dividend in 2025 and maintains multiple funding sources including federal funds lines ($38.0 million available), Federal Home Loan Bank credit ($162.2 million available), and Federal Reserve Bank discount window access ($33.8 million available). Risk factors include potential increases in past due loans, economic conditions affecting borrowers, interest rate changes, and regulatory requirements that could impact the allowance for credit losses.