Page 1 of 18
Form 10-Q
U. S. Securities and Exchange Commission
Washington, DC 20549
[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the 6-month period ended June 30, 1999.
[ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the transition period from ______________ to ______________
Commission File No. 000-18445
Benchmark Bankshares, Inc.
(Name of Small Business Issuer in its Charter)
Virginia 54-1380808
(State or Other Jurisdiction of (IRS Employer ID No.)
Incorporation or Organization)
100 South Broad Street
Kenbridge, Virginia 23944
(Address of Principal Executive Offices)
Issuer's Telephone Number: (804)676-8444
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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.
(1) Yes [X] No [ ] (2) Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest applicable date:
3,025,629.61
<PAGE>
Page 2 of 18
Form 10-Q
Benchmark Bankshares, Inc.
Part I - Table of Contents
June 30, 1999
Part I Financial Information
Item 1 Consolidated Balance Sheet
Consolidated Statement of Income
Condensed Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 3 Quantitative and Qualitative Disclosures about Market Risk
Part II Other Information
<PAGE>
Page 3 of 18
Form 10-Q
Benchmark Bankshares, Inc.
Consolidated Balance Sheet
(Unaudited) (Audited)
June 30, December 31,
1999 1998
---- ----
Assets
Cash and due from banks $ 6,575,867 $ 5,235,130
Securities
Federal Agency obligations 16,085,572 11,274,613
State and municipal obligations 12,775,031 12,095,899
Other securities 137,000 137,000
Federal funds sold 8,392,000 17,415,000
Loans 146,415,907 134,818,220
Less
Unearned interest income (210,396) (226,755)
Allowance for loan losses (1,674,159) (1,558,741)
------------- -------------
Net Loans 144,531,352 133,032,724
Premises and equipment - net 3,289,438 3,200,391
Accrued interest receivable 1,584,547 1,562,214
Deferred income taxes 532,922 328,393
Refundable income taxes - 33,961
Other real estate 541,392 697,862
Other assets 702,452 367,764
------------- -------------
Total Assets $195,147,573 $185,380,951
============= =============
<PAGE>
Page 4 of 18
Form 10-Q
Benchmark Bankshares, Inc.
Consolidated Balance Sheet
(Unaudited) (Audited)
June 30, December 31,
1999 1998
---- ----
Liabilities and Stockholders' Equity
Deposits
Demand (noninterest-bearing) $ 18,810,633 $ 16,201,313
NOW accounts 22,034,557 19,726,296
Money market accounts 8,593,374 6,850,631
Savings 10,318,236 9,663,857
Time, $100,000 and over 20,037,260 18,176,368
Other time 94,344,197 94,273,691
------------- ------------
Total Deposits 174,138,257 164,892,156
Accrued interest payable 774,161 808,284
Dividends payable 481,426 479,594
Other liabilities 228,725 185,704
------------- ------------
Total Liabilities 175,622,569 166,365,738
Stockholders' Equity
Common stock, par value $.21 per share,
authorized 4,000,000 shares; issued
and outstanding 06-30-99, 3,008,911.157,
issued and outstanding 12-31-98,
2,997,465.366 631,871 629,678
Capital surplus 4,428,847 4,314,339
Retained earnings 14,688,421 13,908,096
Unrealized security gains (losses) net
of tax effect (224,135) 163,100
------------- -------------
Total Stockholders' Equity 19,525,004 19,015,213
------------- ------------
Total Liabilities and
Stockholders' Equity $195,147,573 $185,380,951
============= ============
Note: The balance sheet at December 31, 1998 has been derived from the audited
financial statements at that date.
See notes to consolidated financial statements.
<PAGE>
Page 5 of 18
Form 10-Q
Benchmark Bankshares, Inc.
Consolidated Statement of Income
(Unaudited)
Six Months Ended June 30,
1999 1998
---- ----
Interest Income
Interest and fees on loans $6,404,348 $6,179,302
Interest on U. S. Government obligations 421,319 337,173
Interest on State and municipal obligations 302,947 231,809
Interest on Federal funds sold 334,971 240,092
Interest on other securities 2,610 2,610
----------- -----------
Total Interest Income 7,466,195 6,990,986
Interest Expense
Interest on deposits 3,730,224 3,357,053
----------- -----------
Net Interest Income 3,735,971 3,633,933
Provision for Loan Losses 151,619 147,950
----------- -----------
Net Interest Income after Provision 3,584,352 3,485,983
Noninterest Income
Service charges, commissions, and fees on
deposits 213,898 209,338
Other operating income 117,419 67,481
(Losses) on sale of securities (547) (436)
----------- -----------
Total Noninterest Income 330,770 276,383
Noninterest Expense
Salaries and wages 1,125,263 993,618
Employee benefits 254,402 221,379
Occupancy expenses 107,728 99,947
Furniture and equipment expense 95,830 74,019
Other operating expenses 529,072 447,557
----------- -----------
Total Noninterest Expense 2,112,295 1,836,520
----------- -----------
Net Income before Taxes 1,802,827 1,925,846
Income Taxes 540,913 609,386
----------- -----------
Net Income 1,261,914 1,316,460
Other Comprehensive Income (Loss), Net of Tax
Unrealized holding gains arising during period (224,135) 162,329
----------- -----------
Comprehensive Income $1,037,779 $1,478,789
=========== ===========
Net Income per Share $ 0.42 $ 0.44
=========== ===========
See notes to consolidated financial statements.
<PAGE>
Page 6 of 18
Form 10-Q
Benchmark Bankshares, Inc.
Consolidated Statement of Income
(Unaudited)
Three Months Ended June 30,
1999 1998
---- ----
Interest Income
Interest and fees on loans $3,264,726 $3,091,056
Interest on U. S. Government obligations 223,640 172,874
Interest on State and municipal obligations 155,471 114,648
Interest on Federal funds sold 144,820 155,766
Interest on other securities 2,610 2,610
----------- -----------
Total Interest Income 3,791,267 3,536,954
Interest Expense
Interest on deposits 1,873,186 1,709,439
----------- -----------
Net Interest Income 1,918,081 1,827,515
Provision for Loan Losses 122,722 70,492
----------- -----------
Net Interest Income after Provision 1,795,359 1,757,023
Noninterest Income
Service charges, commissions, and fees on
deposits 109,892 108,655
Other operating income 80,910 30,709
(Losses) on sale of securities - (222)
----------- -----------
Total Noninterest Income 190,802 139,142
Noninterest Expense
Salaries and wages 572,159 489,972
Employee benefits 124,378 99,397
Occupancy expenses 56,165 50,650
Furniture and equipment expense 49,234 42,812
Other operating expenses 278,265 245,436
----------- -----------
Total Noninterest Expense 1,080,201 928,267
----------- -----------
Net Income before Taxes 905,960 967,898
Income Taxes 270,740 305,541
----------- -----------
Net Income 635,220 662,357
Other Comprehensive Income (Loss), Net of Tax
Unrealized holding gains arising during period (339,556) 14,034
----------- -----------
Comprehensive Income $ 295,664 $ 676,391
=========== ===========
Net Income per Share $ 0.21 $ 0.22
=========== ===========
See notes to consolidated financial statements.
<PAGE>
Page 7 of 18
Form 10-Q
Benchmark Bankshares, Inc.
Condensed Consolidated Statement of Cash Flows
(Unaudited)
Six Months Ended June 30,
1999 1998
---- ----
Cash Flows from Operating Activities $ 1,210,815 $ 944,958
Cash Flows from Financing Activities
Net increase in demand deposits and interest-
bearing transaction accounts 4,917,581 5,322,025
Net increase in savings and money market
deposits 2,397,122 1,395,373
Net increase in certificates of deposit 1,931,398 6,108,313
Net sale of stock 116,701 440,325
Dividends paid (479,594) (440,824)
------------ -----------
Total Cash Provided by Financing
Activities 8,883,208 12,825,212
Cash Flows from Investing Activities
Purchase of securities (9,593,846) (7,184,085)
Sale of securities 146,607 91,368
Maturity of securities 3,370,428 5,000,000
Increase in loans net of collections (11,498,628) (1,866,779)
Purchase of premises and equipment (200,847) (264,797)
------------ -----------
Total Cash (Used) by Investing
Activities (17,776,286) (4,224,293)
------------ -----------
Increase (Decrease) in Cash and Cash Equivalents $(7,682,263) $9,545,877
============ ===========
See notes to consolidated financial statements.
<PAGE>
Page 8 of 18
Form 10-Q
Benchmark Bankshares, Inc.
Condensed Consolidated Statement of Cash Flows
(Unaudited)
Three Months Ended June 30,
1999 1998
---- ----
Cash Flows from Operating Activities $ 314,448 $ 37,143
Cash Flows from Financing Activities
Net increase in demand deposits and interest-
bearing transaction accounts 3,183,690 2,642,967
Net increase (decrease) in savings and money
market deposits 816,448 161,969
Net increase in certificates of deposit (583,486) 2,695,157
Net sale of stock (43,150) 136,096
------------ -----------
Total Cash Provided by Financing
Activities 3,373,502 5,636,189
Cash Flows from Investing Activities
Purchase of securities (4,598,096) (3,644,085)
Sale of securities 88,325 56,199
Maturity of securities 1,075,428 2,750,251
Increase in loans net of collections (6,509,213) (614,684)
Purchase of premises and equipment (166,279) (151,093)
------------ -----------
Total Cash (Used) by Investing
Activities (10,109,835) (1,603,412)
------------ -----------
Increase (Decrease) in Cash and Cash Equivalents $(6,421,885) $4,069,920
============ ===========
See notes to consolidated financial statements.
<PAGE>
Page 9 of 18
Form 10-Q
Benchmark Bankshares, Inc.
Notes to Consolidated Financial Statements
June 30, 1999
1. Basis of Presentation
The accompanying consolidated financial statements and related
notes of Benchmark Bankshares, Inc. and its subsidiary, Benchmark
Community Bank, were prepared by management, which has the primary
responsibility for the integrity of the financial information. The
statements have been prepared in conformity with generally accepted
accounting principles appropriate in the circumstances and include
amounts that are based on management's best estimates and judgments.
In meeting its responsibilities for the accuracy of its
financial statements, management relies on the Company's internal
accounting controls. The system provides reasonable assurances that
assets are safeguarded and transactions are recorded to permit the
preparation of appropriate financial information.
The interim period financial information included herein is
unaudited; however, such information reflects all adjustments
(consisting solely of normal recurring adjustments), which are, in the
opinion of management, necessary to a fair presentation of financial
position, results of operation, and changes in financial position for
the interim periods herein reported.
2. Significant Accounting Policies and Practices
The accounting policies and practices of Benchmark Bankshares,
Inc. conform to generally accepted accounting principles and general
practice within the banking industry. Certain of the more significant
policies and practices follow:
(a) The consolidated financial statements of Benchmark Bankshares,
Inc. and its wholly owned subsidiary, Benchmark Community
Bank, include the accounts of both companies. All material
inter-company balances and transactions have been eliminated
in consolidation.
(b) Use of Estimates in Preparation of Financial Statements. The
preparation of the accompanying combined financial statements
in conformity with generally accepted accounting principles
requires management to make certain estimates and assumptions
that directly affect the results of reported assets,
liabilities, revenue, and expenses. Actual results may differ
from these estimates.
(c) Cash and Cash Equivalents. The term cash as used in the
Condensed Consolidated Statement of Cash Flows refers to all
cash and cash equivalent investments. For purposes of the
statement, Federal funds sold, which have a one day maturity,
are classified as cash equivalents.
(d) Investment Securities. Pursuant to guidelines established in
FAS 115, the Company has elected to classify a portion of its
current portfolio as securities available-for-sale. This
category refers to investments that are not actively traded
but are not anticipated by management to be held-to-maturity.
Typically, these types of investments will be utilized by
management to meet short-term asset/liability management
needs. The remainder of the portfolio is classified as
held-to-maturity. This category refers to investments that are
anticipated by management to be held until they mature.
<PAGE>
Page 10 of 18
For purposes of financial statement reporting, securities
classified as available-for-sale are to be reported at fair
market value (net of any tax effect) as of the date of the
statements; however, unrealized holding gains or losses are to
be excluded from earnings and reported as a net amount in a
separate component of shareholders' equity until realized.
Securities classified as held-to-maturity are recorded at
cost. The resulting book value ignores the impact of current
market trends.
(e) Loans. Interest on loans is computed by methods which
generally result in level rates of return on principal amounts
outstanding (simple interest). Unearned interest on certain
installment loans is recognized as income using the Rule of
78's Method, which materially approximates the effective
interest method. Loan fees and related costs are recognized as
income and expense in the year the fees are charged and costs
incurred.
(f) Allowance for Loan Losses. The allowance for loan losses is
increased by provisions charged to expense and decreased by
loan losses net of recoveries. The provision for loan losses
is based on the Bank's loan loss experience and management's
detailed review of the loan portfolio which considers economic
conditions, prior loan loss experience, and other factors
affecting the collectivity of loans. Accrual of interest is
discontinued on loans past due 90 days or more when collateral
is inadequate to cover principal and interest or, immediately,
if management believes, after considering economic and
business conditions and collection efforts, that the
borrower's financial condition is such that collection is
doubtful.
(g) Premises and Equipment. Premises and equipment are stated at
cost less accumulated depreciation. Depreciation is computed
generally by the straight line basis over the estimated useful
lives of the assets. Additions to premises and equipment and
major betterments and replacements are added to the accounts
at cost. Maintenance and repairs and minor replacements are
expensed as incurred. Gains and losses on dispositions are
reflected in current earnings.
(h) Other Real Estate. As a normal course of business, the Bank
periodically has to foreclose on property used as collateral
on nonperforming loans. The assets are recorded at cost plus
capital improvement cost.
(i) Depreciation. For financial reporting, property and equipment
are depreciated using the straight line method; for income tax
reporting, depreciation is computed using statutory
accelerated methods. Leasehold improvements are amortized on
the straight line method over the estimated useful lives of
the improvements. Income taxes in the accompanying financial
statements reflect the depreciation method used for financial
reporting and, accordingly, include a provision for the
deferred income tax effect of depreciation which will be
recognized in different periods for income tax reporting.
(j) Earnings Per Share
Earnings per share were computed by using the average shares
outstanding for each period presented. The average shares of
outstanding stock for the first six months of 1999 and 1998
were 3,008,376.022 and 2,962,420.814 shares, respectively.
The Company has a stock option plan for its directors,
officers, and employees. As of June 30, 1999, there were
135,723 share options that had been granted but were
unexercised. Based on current trading values of the stock, the
stock options are not considered materially dilutive;
therefore, the Company's earnings per share are reported as a
simple capital structure.
<PAGE>
Page 11 of 18
(k) Income Taxes. The table below reflects the components of the Net
Deferred Tax Asset account as of June 30, 1999:
Deferred tax assets resulting from loan
loss reserves $ 506,287
Deferred tax liabilities resulting from
depreciation (130,513)
Unrealized securities losses 115,464
Deferred compensation 41,684
----------
Net Deferred Tax Asset $ 532,922
==========
<PAGE>
Page 12 of 18
Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations
Six Months Ending June 30: 1999 Versus 1998
Earnings Summary
Net income of $1,261,914 for the first six months of 1999
decreased $54,546 or 4.14% as compared to net income of $1,316,460
earned during the first six months of 1998. Earnings per share of $.42
as of June 30, 1999 decreased $.02 over the June 30, 1998 level of
$.44. The annualized return on average assets of 1.33% decreased 16.35%
while the annualized return on average equity of 13.10% decreased
13.93% when comparing first six months 1999 results with those of first
six months 1998.
The decrease in earnings resulted from operating expenses
increasing at a greater rate than the interest margin earned.
Interest Income and Interest Expense
Total interest income of $7,466,195 for the first six months
of 1999 increased $475,209 or 6.8% over interest income of $6,990,986
recorded during the first six months of 1998. The major area of
increase was in interest earned on investments as management invested
more funds in higher yielding long-term investments rather than
short-term Federal funds. During the comparison periods, the loan to
deposit ratio and interest rates on loans remained fairly constant.
Total interest expense in the first six months of 1999
increased to a level of $3,730,224. This amounted to an increase of
$373,171 or 11.12% over the level reached during the first six months
of 1998. This increase in interest expense resulted from deposit
growth, as well as the payment of higher interest rates to meet market
competition.
Provision for Loan Losses
While the Bank's loan loss experience ratio remains low,
management continues to set aside increasing provisions to the loan
loss reserve. During the first six months of 1999, the Bank increased
the loan loss reserve by $115,418 to a level of $1,674,159 or 1.15% of
the outstanding loan balance.
At year end 1998, the reserve level amounted to $1,558,741 or
1.16% of the outstanding loan balance net of unearned interest.
Nonperforming Loans
Nonperforming loans consist of loans accounted for on a
non-accrual basis and loans which are contractually past due 90 days or
more as to interest and/or principal payments regardless of the amount
of collateral held. As of June 30, 1999, the Bank had $1,193,926 in
nonperforming loans or .81% of the loan portfolio. The amount of
non-secured loans in this category amounted to $7,592.
Noninterest Income and Noninterest Expense
Noninterest income of $330,770 increased $54,387 or 19.68% for
the first six months of 1999 as compared to the level of $276,383
reached during the first six months of 1998. The increase resulted from
an increase in other operating income as commissions earned on the
investment program increased $27,578.
<PAGE>
Page 13 of 18
Noninterest expense of $2,112,295 increased $275,775 or 15.02%
for the first six months of 1999 as compared to the level of $1,836,520
reached during the first six months of 1998. The change resulted
primarily from increases in salaries and benefits due to the expanding
staff needs.
Off-Balance-Sheet Instruments/Credit Concentrations
The Company is a party to financial instruments with
off-balance-sheet risk in the normal course of business to meet the
financing needs of its customers. Unless noted otherwise, the Bank does
not require collateral or other security to support these financial
instruments. Standby letters of credit are conditional commitments
issued by the Bank to guarantee the performance of a customer to a
third party. Those guarantees are primarily issued to facilitate the
transaction of business between these parties where the exact financial
amount of the transaction is unknown, but a limit can be projected. The
credit risk involved in issuing letters of credit is essentially the
same as that involved in extending loan facilities to customers. There
is a fee charged for this service.
As of June 30, 1999, the Bank had $1,831,989 outstanding
letters of credit. These instruments are based on the financial
strength of the customer and the existing relationship between the Bank
and the customer. Following are the maturities of these instruments as
of June 30:
2000 $ 44,200
2001 1,787,789
Liquidity
As of the end of the first six months of 1999, $58,980,136 or
40.28% of gross loans will mature or are subject to repricing within
one year. These loans are funded in part by $20,037,260 in certificates
of deposit of $100,000 or more of which $13,927,114 mature in one year
or less.
Currently, the Bank has a maturity average ratio for the next
twelve months of 20.57% when comparing current assets and current
liabilities.
At year end 1998, $50,073,775 or 38.85% of gross loans were
scheduled to mature or were subject to repricing within one year and
$14,052,703 in certificates of deposit were scheduled to mature during
1998.
Capital Adequacy
Total shareholder equity was $19,525,004 or 10.01% of total
assets as of June 30, 1999. This compared to $19,015,213 or 10.26% of
total assets as of December 31, 1998.
Primary capital (shareholders' equity plus loan loss reserves)
of $21,199,163 represents 10.86% of total assets as of June 30, 1999 as
compared to $20,573,954 or 11.10% of total assets as of December 31,
1998.
The increase in the equity position resulted from an increase
in earnings in the first six months of 1999 versus the first six months
of 1998 and an increase in capital through the sale of common stock
from the dividend reinvestment program and exercised employee stock
options.
<PAGE>
Page 14 of 18
Three Months Ending June 30: 1999 Versus 1998
The same operating policies and philosophies discussed in the six month
discussion were prevalent throughout the second quarter and the operating
results were predictably similar.
Earnings Summary
Net income of $635,220 for the second quarter of 1999 decreased $27,137
or 4.1% as compared to the $662,357 earned during the second quarter of 1998.
Earnings per share of $.21 for the second quarter of 1999 decreased $.01 or
4.55% when compared to the corresponding period in 1998. The annualized return
on average assets was 1.32% and the return on average equity was 13.48% for the
second quarter of 1999. This compares to a return on average assets of 1.56% and
a return on average equity of 14.92% for the same period in 1998.
The increased earnings is an indication of the growth experienced
during the second quarter. The decline in the return on average equity reflects
the growth in equity through the dividend reinvestment plan and the exercising
of stock option grants at a faster rate than the increase in income.
Interest Income and Interest Expense
Total interest income of $3,791,267 for the second quarter of 1999
increased $254,313 or 7.19% from the total interest income of $3,536,954 for the
corresponding quarter in 1998. The increase resulted primarily from growth in
the loan portfolio. Interest and fees on loans amounted to $3,264,726. This
represented an increase of $173,670 or 5.62% over the corresponding period in
1998.
Interest expense for the second quarter of 1999 increased $163,747 or
9.58% over the same period in 1998. The increase in interest expense reflected
the current economic trend of increased interest rates as well as steady deposit
growth.
Provision for Loan Losses
During the second quarter, the demand for loans was strong and the
level of quality loans continued to increase. During the period, the Bank
provided an additional $122,722 to the reserve through its provision for loan
losses.
Loans and Deposits
During the second quarter of 1999, net loans grew $11,498,628. This
growth results from an aggressive loan demand fueled in part by the Bank opening
two loan production offices in an expanded trade area.
Deposits increased by $7,772,831 for the three month period ending June
30, 1999. Management feels that the growth in deposits has resulted from an
increase in the size of the trade area as well as further penetration into
existing market areas through the community bank operating concept.
<PAGE>
Page 15 of 18
Item 3 Quantitative and Qualitative Disclosures about Market Risk
Through the nature of the banking industry, market risk is
inherent in the Company's operation. A majority of the business is
built around financial products, which are sensitive to changes in
market rates. Such products, categorized as loans, investments, and
deposits are utilized to transfer financial resources. These products
have varying maturities, however, and this provides an opportunity to
match assets and liabilities so as to offset a portion of the market
risk.
Management follows an operating strategy that limits the
interest rate risk by offering only shorter-term products that
typically have a term of no more than five years. By effectively
matching the maturities of inflows and outflows, management feels it
can effectively limit the amount of exposure that is inherent in its
financial portfolio.
As a separate issue, there is also the inherent risk of loss
related to loans and investments. The impact of loss through default
has been considered by management through the utilization of an
aggressive loan loss reserve policy and a conservative investment
policy that limits investments to higher quality issues; therefore,
only the risk of interest rate variations is considered in the
following analysis.
The Company does not currently utilize derivatives as part of
its investment strategy.
The tables below present principal amounts of cash flow as it
relates to the major financial components of the Company's balance
sheet. The cash flow totals represent the amount that will be generated
over the life of the product at its stated interest rate. The present
value discount is then applied to the cash flow stream at the current
market rate for the instrument to determine the current value of the
individual category. Through this two-tiered analysis, management has
attempted to measure the impact not only of a rate change, but also the
value at risk in each financial product category. Only financial
instruments that do not have price adjustment capabilities are herein
presented.
In Table One, the cash flows are spread over the life of the
financial products in annual increments as of June 30 each year with
the final column detailing the present value discounting of the cash
flows at current market rates.
Fair Value of Financial Assets
Benchmark Bankshares, Inc.
June 30, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Current
Categories 2000 2001 2002 2003 2004 Thereafter Value
- ---------- ---- ---- ---- ---- ---- ---------- -----
Loans
Commercial $10,989,908 $ - $ - $ - $ - $ - $10,414,219
Mortgage 40,780,715 22,889,230 16,300,596 9,373,543 21,649,862 3,767,899 95,816,482
Simple Interest I/L 11,020,077 6,956,337 3,898,484 2,225,262 843,561 13,166 21,107,276
Rule of 78ths I/L 1,221,148 637,283 292,355 56,833 4,172 - 1,897,873
Investments
U. S. Government Agencies 863,810 863,810 863,810 1,849,748 3,261,798 12,440,635 14,118,263
Municipals
Nontaxable 784,842 913,974 2,587,886 2,066,364 1,058,001 6,541,463 10,728,518
Taxable 57,500 61,693 61,693 61,693 571,698 157,250 706,645
Mortgage Backed Securities 423,963 550,893 295,427 264,507 225,289 1,000,407 2,224,908
</TABLE>
<PAGE>
Page 16 of 18
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Current
Categories 2000 2001 2002 2003 2004 Thereafter Value
---------- ---- ---- ---- ---- ---- ---------- -----
Certificates of Deposits
< 182 days 3,839,429 - - - - - 3,763,540
182 - 364 days 4,813,777 - - - - - 4,622,409
1 year - 2 years 38,061,394 2,010,060 - - - - 38,197,947
2 years - 3 years 3,970,953 7,945,832 118,870 - - - 11,123,445
3 years - 4 years 1,658,718 1,296,085 2,054,351 51,663 - - 3,550,198
4 years - 5 years 953,560 1,410,091 583,162 1,009,909 37,323 - 1,897,873
5 years 18,657,068 6,740,311 6,049,669 8,808,332 13,512,238 37,670 46,837,261
</TABLE>
In Table Two, the cash flows are present value discounted by
predetermined factors to measure the impact on the financial products
portfolio at six and twelve month intervals.
Variable Interest Rate Disclosure
Benchmark Bankshares, Inc.
June 30, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Valuation of Valuation of
Financial Instruments No Financial Instruments
Given an Interest Rate Change In Given an Interest Rate
Decrease of (x) Basis Points Interest Increase of (x) Basis Points
Categories (200 BPS) (100 BPS) Rate 100 BPS 200 BPS
- ---------- --------- --------- ---- ------- -------
Loans
Commercial $ 10,541,469 $ 10,477,534 $10,414,219 $ 10,351,518 $ 10,289,422
Mortgage 100,513,281 98,113,582 95,816,482 93,615,996 91,506,569
Simple Interest I/L 21,864,630 21,479,795 21,107,276 20,746,526 20,397,028
Rule of 78ths I/L 1,953,754 1,925,432 1,897,873 1,871,047 1,844,927
Investments
U. S. Government Securities 15,887,234 14,967,412 14,118,263 13,333,357 12,606,923
Municipals
Nontaxable 12,133,007 11,517,525 10,728,518 10,416,817 9,924,035
Taxable 771,700 738,189 706,645 676,928 648,908
Mortgage Backed Securities 2,460,899 2,364,918 2,224,908 2,190,560 2,111,263
Certificates of Deposit
< 182 days 3,801,106 3,782,230 3,763,540 3,745,034 3,726,709
182 - 364 days 4,712,920 4,667,226 4,622,409 4,578,445 4,535,309
1 year - 2 years 38,978,467 38,584,269 38,197,947 37,819,269 37,448,011
2 years - 3 years 11,487,353 11,302,933 11,123,445 10,948,710 10,778,555
3 years - 4 years 3,717,228 3,632,139 3,550,198 3,471,253 3,395,159
4 years - 5 years 3,717,228 3,632,139 3,550,198 3,471,253 3,395,158
5 years 49,372,042 48,076,021 46,837,261 45,652,500 44,518,696
</TABLE>
<PAGE>
Page 17 of 18
Form 10-Q
Benchmark Bankshares, Inc.
June 30, 1999
Part II Other Information
Item 1 Legal Proceedings
None
Item 2 Changes in Securities
None
Item 3 Defaults Upon Senior Securities
None
Item 4 Submission of Matters to a Vote of Security Holders
None
Item 5 Other Information
None
Item 6 Report on Form 8-K
No reports on Form 8-K have been filed during the
quarter ended June 30, 1999.
<PAGE>
Page 18 of 18
Form 10-Q
Benchmark Bankshares, Inc.
June 30, 1999
Signatures
Pursuant to the requirements 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.
Benchmark Bankshares, Inc.
(Registrant)
Date: August 10, 1999 Ben L. Watson, III
------------------
President and CEO
Date: August 10, 1999 Janice C. Whitlow
-----------------
Cashier and Treasurer
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<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
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0
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<LOAN-LOSSES> 151,619
<SECURITIES-GAINS> (547)
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<INCOME-PRETAX> 1,802,827
<INCOME-PRE-EXTRAORDINARY> 1,802,827
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<CHANGES> 0
<NET-INCOME> 1,802,827
<EPS-BASIC> .37
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