Uwharrie Capital Net Jumps 27% in Q2

Key Points

• Net income (GAAP) increased 27.3% to $2.8 million, with EPS up 31% year over year.

• Net interest margin stood at 3.56%, with continued loan and deposit growth supporting asset expansion.

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Uwharrie Capital (OTC:UWHR), a community-focused bank operating mainly in central North Carolina, reported its latest quarterly earnings on August 22, 2025, announcing its second quarter results. Net income (GAAP) was $2.8 million, a 27.3% rise (GAAP) from the year-earlier period, and diluted earnings per share (GAAP) of $0.38, representing 31.0% growth compared to Q2 2024, as the company saw broad-based gains across net interest, noninterest, and mortgage banking income, and highlighted improved profitability. Overall, it was a quarter of steady top- and bottom-line growth amid a continued focus on expanding the loan book, deposit base, and earnings power.

Company Overview and Focus Areas

Uwharrie Capital is a bank holding company with a deep emphasis on serving local communities in North Carolina, particularly in Stanly, Anson, Cabarrus, Randolph, and Mecklenburg Counties. Its business centers around traditional community banking -- providing checking, savings, commercial lending, and mortgage services to individuals and small businesses. The company's approach relies on building long-term customer relationships with an emphasis on service, local knowledge, and personalized decision-making.

Key factors for its continued success include maintaining a strong community presence, staying current with technological advances, and navigating the complex regulatory requirements that shape the banking industry. Ongoing attention to the economic conditions in its service regions also plays a central role in its strategy.

Quarter Highlights: Growth, Product Trends, and Expenses

The latest quarter saw net income climb to $2.8 million, up from $2.2 million last year. Earnings per share (GAAP) increased to $0.38, a 31% improvement. Mortgage banking, which encompasses services like originating and selling home loans, rose 44.3% year over year for the six months ended June 30, 2025.

Total loans reached $687 million, rising 7.2% from June 30, 2024, while total assets measured $1.17 billion, up 4.1% from June 30, 2024. On the funding side, deposits increased to $1.06 billion, supported by steady inflows across demand, savings, and time deposit accounts. Savings balances grew 7.8% from June 30, 2024 to June 30, 2025.

Net interest margin, representing the difference between interest earned on loans and paid on deposits as a percentage of average earning assets, climbed to 3.56%. Noninterest income (GAAP) rose 38.5% compared to Q2 2024, reflecting a significant jump in mortgage-related activities.

Salary and benefit costs were up 11% compared to Q2 2024, "other operating expenses" rose nearly 58% compared to Q2 2024. The provision for credit losses was $254,000, down from $431,000 in Q2 2024. No noteworthy one-time events or items affecting results were disclosed in the release. The company did not announce a change in its dividend for the quarter.

Business Strategy, Technology, and Market Context

Uwharrie Capital highlights its community engagement initiatives, including a focused effort in April for Community Banking Month. According to management's direct statement, its “concentrated effort reaffirmed our deep commitment to service and civic engagement.”

On the technology front, the company did not provide updates on new digital products, internet banking systems, or service upgrades in this period. Although previous public statements have highlighted a goal to adapt technologically, the lack of detail on this front in the latest earnings is notable, especially as competition from larger banks and fintech companies increases. Regulatory compliance also received little attention in the report, although the bank’s strong capital position supports ongoing regulatory health. No issues or new compliance initiatives were cited.

Credit quality indicators, such as the proportion of nonperforming loans or charge-off rates, were not reported in the earnings release, and without specific data, it's difficult to form a complete view of underlying risk. Book value per share rose to $7.81, a 36% jump from 2024.

Peer comparison data places Uwharrie Capital as the 14th ranked bank nationally (under $2 billion in assets) by the American Bankers Association, suggesting the bank is performing well compared to similar-sized peers. However, the absence of information about new product rollouts, technology investment, or strategic differentiation could pose challenges amid a highly competitive environment.

Looking Ahead: Outlook and Investor Considerations

The company did not offer an earnings outlook or financial guidance for the rest of 2025. There was no projection provided by management regarding expected growth trajectories for revenue, loans, or profitability. The release contains broad statements about “growing with purpose” and focusing on core values but lacks specific forward-looking targets or quantified commentary.

Investors will want to watch upcoming quarters for more transparency on the bank’s approach to technology, further detail on its expense growth, and sharper disclosures on asset quality. Monitoring net interest margin and loan growth will also be key to tracking progress throughout the rest of the year.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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