Excessive / Luxury Expenditure Policy:

Updated and approved by Uwharrie Capital Corp Board of Directors, January 10, 2012

I. STATEMENT OF POLICY

Uwharrie Capital Corp (the "Company") and its direct and indirect subsidiaries prohibit the expenditure(s) of Company funds that are excessive and not reasonable in light of the purpose and justification for which the expenditure(s) were made. Company funds should only be used to achieve Company purposes, including but not limited to staff development, performance incentives, customer appreciation, marketing and promotion, community development, general advancement of Company profit and shareholder return, or other acceptable goals in the normal course of the Company's business. When spending Company funds, expenditures should be evaluated for their prudence, return on investment, general reasonableness, possible risk of damage to the Company's image and/or standing with the Company's various stakeholders, including its employees, investors, customers, and the communities in which the Company operates. Strict adherence to this Excessive/Luxury Expenditure Policy ("Policy") is mandated for all Company employees, officers, and directors.

II. IMPLEMENTATION OF POLICY

A. Prohibited Expenditures

All expenditures of Company funds that are excessive and/or in violation of the Company's Statement of Policy above are prohibited. The threshold determination of what is excessive is whether the expenditure is reasonable in light of the Company purpose for which it was made.

B. Prior Approval Required

As the dollar amount of an expenditure increases, the risk that such an expenditure may be excessive and unreasonable in light of Company objectives also increases. Therefore, as outlined in Section III below, there are certain Threshold Expenditure Amounts above which the approval of the Chief Executive Officer ("CEO") or Chief Financial Officer ("CFO") is required. The CEO or CFO may designate approval power to other executive officers as the CEO or CFO deems prudent. The CEO and CFO, however, remain responsible for compliance with this policy in respect of each threshold expenditure they, or their designated officer agent(s), authorize or effect. A written record should be kept of all expenditures requiring prior approval, which shall include a record of who provided the necessary approval.

C. CEO & CFO Certification

Annually, if any expenditure was made that required prior approval as detailed in section II.B above, the CEO and CFO must certify that proper prior approval was obtained. This certification shall be maintained in the Company's corporate records, and a copy shall be presented to the Company's Board of Directors.

III. CATEGORIES OF EXPENDITURES AND THRESHOLD AMOUNTS

A. Entertainment

Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation, and not otherwise covered in another category of expenditure. It involves the use of company funds for such activities in order to enhance current or potential customer relationships, spur business development, augment Company marketing initiatives or community relations, or something of similar import. Examples of such activities are customer golf outings, dining out, sporting events, etc. Such activities are permissible as long as they further a Company objective and are not excessive.

Threshold Expenditure Amount:

Any lump-sum entertainment expense over $5,000 requires prior approval as outlined in Section II.B. Approval authorization must be by Uwharrie Capital Corp CEO, COO, or CFO.

B. Office or Facility Renovations

Office or facility renovations include the reconstruction, up-fitting, furnishing or remodeling of existing facilities or offices, including branch and corporate buildings. New branches, operation centers, or corporate facility construction would not be included in this category, but all expenses related to construction thereto should also be evaluated for their reasonableness.

Threshold Expenditure Amount:

Any total project cost in excess of $5,000 requires prior approval as outlined in Section II.B. If the expenditure relates to the office of the CEO or CFO, the non-affected party shall make the approval. Approval authorization must be by Uwharrie Capital Corp CEO, COO, EVP Operations/Special Projects, SVP–Administration or EVP–Marketing.

C. Transportation

Travel for any Company purpose, whether by automobile, bus, train, or aircraft, that is reimbursed by the Company. Use of private, chartered aircraft service is discouraged and needs majority vote approval of the Board of Directors. Use of the most cost-effective mode of transportation is encouraged. The cost of lodging while traveling is not included in this category.

Threshold Expenditure Amount:

Any transportation expense above $5,000 requires prior approval as outlined in Section II.B. Approval authorization must be by Uwharrie Capital Corp CEO, COO, or CFO.

D. Hosted Events

Includes holiday parties, employee/customer recognition events, seminars, and marketing events hosted by the Company. Employee morale and company culture, as well as the establishment of strong customer and community relationships, are important aspects of the Company's business. The Company supports and will continue to invest in these aspects of its business. Expenditures on hosted events, however, should be in line with the spirit of this Policy. It is also encouraged, as appropriate, that such Company-sponsored events be held locally in the communities in which we operate.

Threshold Expenditure Amount:

Any hosted event expense over $20,000 requires prior approval as outlined in Section II.B, in addition to whatever other customary approval is otherwise required. Approval authorization must be by Uwharrie Capital Corp CEO or COO.

E. Conferences/Training Seminars

Includes non-company hosted conferences and seminars, such as educational and ethics learning opportunities related to the financial service industry. The Company encourages its employees to take advantage of professional development opportunities, whether at the employee, officer, or director level. Expenditures on such conference and training opportunities, however, should be commensurate with the benefit and return they provide to the participant as an individual and the Company more generally.

Threshold Expenditure Amount:

Any single conference expenditure in excess of $3,500 requires prior approval as outlined in Section II.B. Approval authorization must be by Uwharrie Capital Corp CEO, COO, or CFO.

F. Other

Other expenses not covered in a separate category should only be made in compliance with Sections I and II.A above. Charitable donations and contributions in excess of $5,000 require prior approval as outlined in Section II.B. Approval authorization must be by Uwharrie Capital Corp CEO, COO, or CFO.

IV. REPORTING OF VIOLATIONS

Any employee, officer, or director that becomes aware of a violation of this Policy shall immediately report such violation to his or her supervisor for reporting to the CFO and CEO. The CEO and CFO, collectively, shall make the initial determination of whether a violation occurred and the proper remedial measure that should be taken. If the CEO and CFO cannot agree on the existence of a violation or the proper remedial measure or if the CEO or CFO is the alleged violator, the Board of Directors shall have the final determination on whether an excessive expenditure has occurred and what the proper remedial measure shall be. A violator may be subject to a wide-variety of remedial measures, up to and including termination of employment.

V. AMENDMENT AND INTERPRETATION

This Policy should be interpreted and amended, as necessary, so as to be in compliance with the Troubled Asset Relief Program's (TARP's) Standards for Compensation and Corporate Governance outlined in Section 111 of the Emergency Economic Stabilization Act of 2008 (EESA), as amended by the American Recovery and Reinvestment Act of 2009 (ARRA), and as interpreted from time to time by the U.S. Department of Treasury.

Operating Procedures - Excessive/Luxury Expenditure Policy

• The UCC Board of Directors has approved the above policy to be in compliance with the terms of its TARP agreement with the U.S. Treasury.
• The policy requires that any expenditure over an established threshold amount, as outlined in the policy, MUST be PRE-APPROVED by one of the individuals listed on the attached sheet (below).
• Any associate desiring to spend an amount above the established thresholds must first submit their request, in writing, to one of the authorized executives.
• Via email or written authorization, the executive will approve or deny your request and copy the accounts payable department.
• The accounts payable department will maintain the authorizations and will prepare a list of pre approved expenditures which will be reported annually to the Board for their review.
• Any associate failing to follow these procedures will be subject to disciplinary action up to and including termination.

Uwharrie Capital Corp - Excessive/Luxury Expenditure Thresholds

	Type of Expenditure	Threshold	Approved Authorization Required
	Entertainment	$5,000	UCC CEO, COO or CFO
	Transportation	$5,000	UCC CEO, COO or CFO
	Conferences / Training Seminars	$3,500	UCC CEO, COO or CFO
	Hosted Events/Public Relations	$20,000	UCC CEO or COO
	Office / Facility Renovations	$5,000	UCC CEO, COO, SVP-Administration, EVP-Marketing, EVP Operations-Special Projects
	Other / Donations	$5,000	UCC CEO, COO or CFO