Exhibit 99.1

First Quarter Report

March 31, 2011

June 7, 2011

Dear Shareholder:

We are living in a different time. For many years North Carolina has been a banking leader in the Southeast. In this, what is now being called The Great Recession, our state has been one of the hardest hit, in particular, the Charlotte region. Almost half of the banking organizations in the state have been losing money for the last three years.

Uwharrie Capital Corp maintains an enviable position in that we remain profitable and continue to experience growth in our balance sheet. Assets were $528 million for the period ending March 31, 2011, an increase of 8.6% from the same period last year. Net loans held increased to $369.4 million from $357.1 million, up 3.4% and deposits increased to $430.4 million from $380.3 million, up 13.2%.

Net income for the period ending March 31, 2011 was $209 thousand compared to $539 thousand for the same period of 2010. For each of the three months ended March 31, 2011 and March 31, 2010, net income available to shareholders was $48 thousand and $378 thousand, respectively. Net income available to shareholders takes into consideration the payment of dividends on preferred stock issued by the Company. There are a number of factors that impact bank earnings and our operating results during the first quarter. As we continue to identify and head off any potential troubled credits, we expensed $1.4 million for loan loss provision during the first quarter of 2011, compared to $213 thousand during the first quarter of 2010. Additionally, we had an increase in expenses in our personnel costs related to the interpretation and implementation of the new regulations that were heaped on us in the last year.

While net interest income remained relatively flat, non-interest income increased notably during the first quarter. This is a result of gains realized in the investment portfolio and an increase in income from the efforts of our Wealth Management area and Mortgage Banking.

Asset quality continues to be a major concern for all financial institutions and we are gaining good ground. Our diligent focus on working out under-performing loans over the last several quarters generated positive results in the first quarter of 2011. Our capital level continues to exceed regulatory definitions of “well-capitalized.”

There are a number of reports showing up in the media these days about the future of community banks. There is talk of further consolidation in the industry, speculating that the approximately 7,000 community banks in the United States will be reduced by half in the coming years as community bankers become increasingly overwhelmed by regulation, technology, lack of scale and complexity. They say that bankers, especially community bankers, are exhausted, disheartened and their companies lack the talent

required to succeed. That is not the case at Uwharrie Capital Corp. We have developed the people, the technology and the other resources to remain competitive in this new environment. Our Mission remains our strength. With the collective efforts of our people, customers, shareholders and the communities we serve our future and our returns are promising. Together, we continue to “make a difference!”

Uwharrie Capital Corp and Subsidiaries

Consolidated Balance Sheets

Uwharrie Capital Corp and Subsidiaries

Consolidated Statements of Income