Page 1 of 19
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, 2000.
[ ] 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:
3,006,225.560
<PAGE>
Page 2 of 19
Form 10-Q
Benchmark Bankshares, Inc.
Part I - Table of Contents
June 30, 2000
Part I Financial Information
Item 1 Consolidated Balance Sheet
Consolidated Statement of Income and Comprehensive 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
<PAGE>
Page 3 of 19
Form 10-Q
Benchmark Bankshares, Inc.
Consolidated Balance Sheet
(Unaudited) (Audited)
June 30, December 31,
2000 1999
---- ----
Assets
Cash and due from banks $ 7,111,065 $ 7,533,280
Securities
Federal Agency obligations 13,338,430 13,322,152
State and municipal obligations 8,752,149 12,590,401
Mortgage backed securities 1,665,326 2,267,912
Other securities 195,490 137,000
Federal funds sold 4,621,000 -
Loans 158,972,810 152,262,727
Less
Unearned interest income (28,072) (64,643)
Allowance for loan losses (1,589,752) (1,522,632)
------------- -------------
Net Loans 157,354,986 150,675,452
Premises and equipment - net 3,747,790 3,423,779
Accrued interest receivable 1,709,356 1,390,010
Deferred income taxes 678,518 642,481
Other real estate 929,307 667,808
Other assets 735,857 674,670
------------- -------------
Total Assets $200,839,274 $193,324,945
============= =============
<PAGE>
Page 4 of 19
Form 10-Q
Benchmark Bankshares, Inc.
Consolidated Balance Sheet
(Unaudited) (Audited)
June 30, December 31,
2000 1999
---- ----
Liabilities and Stockholders' Equity
Deposits
Demand (noninterest-bearing) $ 18,525,231 $ 16,213,541
NOW accounts 21,368,934 19,905,599
Money market accounts 7,558,198 8,046,212
Savings 10,128,167 9,763,624
Time, $100,000 and over 19,652,081 16,560,926
Other time 101,123,862 94,250,638
------------- -------------
Total Deposits 178,356,473 164,740,540
Federal funds purchased - 7,035,000
Accrued interest payable 912,192 766,964
Accrued income tax payable 31,953 23,005
Dividends payable 480,996 482,493
Other liabilities 278,194 229,197
------------- -------------
Total Liabilities 180,059,808 173,277,199
Stockholders' Equity
Common stock, par value $.21 per share,
authorized 4,000,000 shares; issued
and outstanding 06-30-00, 3,006,225.560,
issued and outstanding 12-31-99,
3,015,577.591 631,308 633,272
Capital surplus 4,404,101 4,501,508
Retained earnings 16,312,610 15,455,510
Unrealized security gains (losses) net
of tax effect (568,553) (542,544)
------------- -------------
Total Stockholders' Equity 20,779,466 20,047,746
------------- -------------
Total Liabilities and
Stockholders' Equity $200,839,274 $193,324,945
============= =============
Note: The balance sheet at December 31, 1999 has been derived from the audited
financial statements at that date.
See notes to consolidated financial statements.
<PAGE>
Page 5 of 19
Form 10-Q
Benchmark Bankshares, Inc.
Consolidated Statement of Income and Comprehensive Income
(Unaudited)
Six Months Ended June 30,
2000 1999
---- ----
Interest Income
Interest and fees on loans $7,044,305 $6,404,348
Interest on U. S. Government obligations 494,445 421,319
Interest on State and municipal obligations 231,847 302,947
Interest on Federal funds sold 106,460 334,971
Interest on other securities 5,795 2,610
----------- -----------
Total Interest Income 7,882,852 7,466,195
Interest Expense
Interest on deposits 3,782,003 3,730,224
Interest on Federal funds purchased 54,283 -
Interest other 402 -
----------- -----------
Total Interest Expense 3,836,688 3,730,224
----------- -----------
Net Interest Income 4,046,164 3,735,971
Provision for Loan Losses 127,266 151,619
----------- -----------
Net Interest Income after Provision 3,918,898 3,584,352
Noninterest Income
Service charges, commissions, and fees on
deposits 240,031 213,898
Other operating income 246,468 117,419
(Losses) on sale of securities (3,308) (547)
----------- -----------
Total Noninterest Income 483,191 330,770
Noninterest Expense
Salaries and wages 1,281,663 1,125,263
Employee benefits 285,484 254,402
Occupancy expenses 154,771 107,728
Furniture and equipment expense 102,764 95,830
Other operating expenses 640,570 529,072
----------- -----------
Total Noninterest Expense 2,465,252 2,112,295
----------- -----------
Net Income before Taxes 1,936,837 1,802,827
Income Taxes 601,452 540,913
----------- -----------
Net Income 1,335,385 1,261,914
Other Comprehensive Income, Net of Tax
Net unrealized holding gains (loss)
arising during period (36,754) (224,135)
----------- -----------
Comprehensive Income $1,298,631 $1,037,779
=========== ===========
Net Income per Share $ 0.44 $ 0.42
=========== ===========
See notes to consolidated financial statements.
<PAGE>
Page 6 of 19
Form 10-Q
Benchmark Bankshares, Inc.
Consolidated Statement of Income and Comprehensive Income
(Unaudited)
Three Months Ended June 30,
2000 1999
---- ----
Interest Income
Interest and fees on loans $3,622,185 $3,264,726
Interest on U. S. Government obligations 244,319 223,640
Interest on State and municipal obligations 107,749 155,471
Interest on Federal funds sold 94,548 144,820
Interest on other securities 5,795 2,610
----------- -----------
Total Interest Income 4,074,596 3,791,267
Interest Expense
Interest on deposits 1,988,334 1,873,186
----------- -----------
Net Interest Income 2,086,262 1,918,081
Provision for Loan Losses 91,579 122,722
----------- -----------
Net Interest Income after Provision 1,994,683 1,795,359
Noninterest Income
Service charges, commissions, and fees on
deposits 129,886 109,892
Other operating income 133,409 80,910
----------- -----------
Total Noninterest Income 263,295 190,802
Noninterest Expense
Salaries and wages 655,493 572,159
Employee benefits 143,264 124,378
Occupancy expenses 84,565 56,165
Furniture and equipment expense 55,926 49,234
Other operating expenses 344,829 278,265
----------- -----------
Total Noninterest Expense 1,284,077 1,080,201
----------- -----------
Net Income before Taxes 973,901 905,960
Income Taxes 304,563 270,740
----------- -----------
Net Income 669,338 635,220
Other Comprehensive Income, Net of Tax
Net unrealized holding gains (loss)
arising during period (26,009) (339,556)
----------- -----------
Comprehensive Income $ 643,329 $ 295,664
=========== ===========
Net Income per Share $ 0.22 $ 0.21
=========== ===========
See notes to consolidated financial statements.
<PAGE>
Page 7 of 19
Form 10-Q
Benchmark Bankshares, Inc.
Condensed Consolidated Statement of Cash Flows
(Unaudited)
Six Months Ended June 30,
2000 1999
---- ----
Cash Flows from Operating Activities $1,124,284 $ 1,210,815
Cash Flows from Financing Activities
Decrease in Federal funds purchased (7,035,000) -
Net increase in demand deposits and interest-
bearing transaction accounts 3,775,025 4,917,581
Net increase (decrease) in savings and money
market deposits (123,471) 2,397,122
Net increase in certificates of deposit 9,964,379 1,931,398
Dividends paid (482,493) (479,594)
Sale of stock 55,934 116,701
Purchase of stock (155,305) -
----------- ------------
Total Cash Provided by Financing
Activities 5,999,069 8,883,208
Cash Flows from Investing Activities
Purchase of securities (615,267) (9,593,846)
Sale of securities 4,750,389 146,607
Maturity of securities 93,948 3,370,428
Net increase in loans (6,710,083) (11,498,628)
Purchase of premises and equipment (443,555) (200,847)
----------- ------------
Total Cash (Used) by
Investing Activities (2,924,568) (17,776,286)
----------- ------------
Increase (Decrease) in Cash and Cash Equivalents $4,198,785 $(7,682,263)
=========== ============
See notes to consolidated financial statements.
<PAGE>
Page 8 of 19
Form 10-Q
Benchmark Bankshares, Inc.
Condensed Consolidated Statement of Cash Flows
(Unaudited)
Three Months Ended June 30,
2000 1999
---- ----
Cash Flows from Operating Activities $ 500,177 $ 314,448
Cash Flows from Financing Activities
Net increase in demand deposits and interest-
bearing transaction accounts 2,614,763 3,183,690
Net increase in savings and money market
deposits 519,493 816,448
Net increase (decrease) in certificates of
deposit 2,605,175 (583,486)
Purchase of stock (88,680) (43,150)
----------- ------------
Total Cash Provided by Financing
Activities 5,650,751 3,373,502
Cash Flows from Investing Activities
Purchase of securities (149,809) (4,598,096)
Sale of securities - 88,325
Maturity of securities 93,948 1,075,428
Net increase in loans (4,344,229) (6,509,213)
Purchase of premises and equipment (56,830) (166,279)
----------- ------------
Total Cash (Used) by
Investing Activities (4,456,920) (10,109,835)
----------- ------------
Increase (Decrease) in Cash and Cash Equivalents $1,694,008 $(6,421,885)
=========== ============
See notes to consolidated financial statements.
<PAGE>
Page 9 of 19
Form 10-Q
Benchmark Bankshares, Inc.
Notes to Consolidated Financial Statements
June 30, 2000
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 19
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 2000 and 1999
were 3,010,823.074 and 3,008,376.022 shares, respectively.
The Company has a stock option plan for its directors,
officers, and employees. As of June 30, 2000, there were
133,867 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 19
(k) Income Taxes. The table below reflects the components of the
Net Deferred Tax Asset account as of June 30, 2000:
Deferred tax assets resulting from loan
loss reserves $450,703
Deferred tax liabilities resulting from
depreciation (123,990)
Unrealized securities losses 292,891
Deferred compensation 58,914
---------
Net Deferred Tax Asset $678,518
=========
<PAGE>
Page 12 of 19
Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations
Six Months Ending June 30: 2000 Versus 1999
Earnings Summary
Net income of $1,335,385 for the first six months of 2000
increased $73,471 or 5.82% as compared to net income of $1,261,914
earned during the first six months of 1999. Earnings per share of $.44
as of June 30, 2000 increased $.02 over the June 30, 1999 level of
$.42. The annualized return on average assets of 1.36% increased 2.26%
while the annualized return on average equity of 13.08% decreased .15%
when comparing first six months of 2000 results with those of first six
months 1999.
The increase in earnings resulted from a strong loan demand.
Interest Income and Interest Expense
Total interest income of $7,882,852 for the first six months
of 2000 increased $416,657 or 5.58% over interest income of $7,466,195
recorded during the first six months of 1999. The major area of
increase was in interest earned on loans as management realigned the
earning asset mix away from lower earning investments.
Total interest expense in the first six months of 2000
increased to a level of $3,836,688. This amounted to an increase of
$106,464 or 2.85% over the level reached during the first six months of
1999. 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 2000, the Bank increased
the loan loss reserve by $67,120 to a level of $1,589,752 or 1.00% of
the outstanding loan balance.
At year end 1999, the reserve level amounted to $1,522,632 or
1.00% 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, 2000, the Bank had $780,419 in
nonperforming loans or .49% of the loan portfolio. The amount of
unsecured loans in this category amounted to $4,112.
Noninterest Income and Noninterest Expense
Noninterest income of $483,191 increased $152,421 or 46.08%
for the first six months of 2000 as compared to the level of $330,770
reached during the first six months of 1999. The increase resulted from
an increase in other operating income as the Bank expands into the
Chase City, Clarksville, and Lawrenceville locations.
<PAGE>
Page 13 of 19
Noninterest expense of $2,465,252 increased $352,957 or 16.71%
for the first six months of 2000 as compared to the level of $2,112,295
reached during the first six months of 1999. The increase was also
related to additional expenses incurred as the Bank moved into and
developed new markets.
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, 2000, the Bank had $1,902,489 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:
2001 $1,885,489
2002 16,000
2003 1,000
Liquidity
As of the end of the first six months of 2000, $49,401,785 or
31.08% of gross loans will mature or are subject to repricing within
one year. These loans are funded in part by $19,652,081 in certificates
of deposit of $100,000 or more of which $10,602,498 mature in one year
or less.
Currently, the Bank has a maturity average ratio for the next
twelve months of 54.27% when comparing current assets and current
liabilities.
At year end 1999, $55,137,045 or 39.44% of gross loans were
scheduled to mature or were subject to repricing within one year and
$13,285,923 in certificates of deposit were scheduled to mature during
2000.
Capital Adequacy
Total shareholder equity was $20,779,466 or 10.35% of total
assets as of June 30, 2000. This compared to $20,047,746 or 10.37% of
total assets as of December 31, 2000.
Primary capital (shareholders' equity plus loan loss reserves)
of $22,369,218 represents 11.14% of total assets as of June 30, 2000 as
compared to $21,570,378 or 11.16% of total assets as of December 31,
1999.
The increase in the equity position resulted from an increase
in earnings in the first six months of 2000 versus the first six months
of 1999.
<PAGE>
Page 14 of 19
Three Months Ending June 30: 2000 Versus 1999
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 $669,338 for the second quarter of 2000
increased $34,118 or 5.37% as compared to the $635,220 earned during
the second quarter of 1999. Earnings per share of $.22 for the second
quarter of 2000 increased $.01 or 4.76% when compared to the
corresponding period in 1999. The annualized return on average assets
was 1.36% and the return on average equity was 13.12% for the second
quarter of 1999. This compares to a return on average assets of 1.32%
and a return on average equity of 13.48% for the same period in 1999.
The increased earnings is an indication of the growth experienced
during the second quarter.
Interest Income and Interest Expense
Total interest income of $4,074,596 for the second quarter of
2000 increased $283,329 or 7.47% from the total interest income of
$3,791,267 for the corresponding quarter in 1999. The increase resulted
primarily from growth in the loan portfolio. Interest and fees on loans
amounted to $3,622,185. This represented an increase of $357,459 or
10.95% over the corresponding period in 1999.
Interest expense for the second quarter of 2000 increased
$115,148 or 6.15% over the same period in 1999. 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 $91,379 to the reserve through its
provision for loan losses.
Loans and Deposits
During the second quarter of 2000, net loans grew $4,344,229.
This growth results from the Bank's expansion into three new markets in
1999.
Deposits increased by $5,739,431 for the three month period
ending June 30, 2000. 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 19
Item 3 Quantitative and Qualitative Disclosures about Market Risk
Through the nature of the banking industry, market risk is
inherent in the Bank'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, 2000
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Current
Categories 2001 2002 2003 2004 2005 Thereafter Value
---------- ---- ---- ---- ---- ---- ---------- -----
Loans
Commercial $ 17,202,560 $ - $ - $ - $ - $ - $15,710,100
Mortgage 28,934,801 20,298,477 22,237,923 23,507,348 22,287,420 6,943,688 96,477,870
Simple Interest I/L 12,900,254 9,563,532 5,403,800 3,147,272 1,347,272 66,752 27,558,306
Rule of 78ths I/L - - - - - - 371,790
Investments
U. S. Government Agencies 863,810 863,810 1,849,748 3,261,798 2,917,085 9,523,550 8,838,430
Municipals
Nontaxable 568,586 928,495 1,127,179 888,246 265,436 5,260,660 6,840,577
Taxable 61,693 61,693 61,693 571,693 31,450 157,250 1,166,128
Mortgage Backed Securities 281,169 254,905 231,741 211,217 334,635 631,219 1,665,329
</TABLE>
<PAGE>
Page 16 of 19
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Current
Categories 2001 2002 2003 2004 2005 Thereafter Value
---------- ---- ---- ---- ---- ---- ---------- -----
Certificates of Deposits
< 182 days 2,615,134 - - - - - 2,609,327
182 - 364 days 5,044,026 - - - - - 4,989,197
1 year - 2 years 39,966,173 11,223,178 - - - - 47,763,020
2 years - 3 years 7,616,342 3,645,927 3,991,968 - - - 13,777,347
3 years - 4 years 1,200,762 1,828,279 3,846,564 378,235 - - 6,273,383
4 years - 5 years 1,333,267 540,194 883,172 813,177 - - 3,110,355
5 years 5,978,550 5,351,422 7,356,762 11,439,946 18,675,669 - 39,019,773
</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, 2000
<TABLE>
<CAPTION>
<S> <C> <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 $ - $ - $15,710,100 $ - $ -
Mortgage 101,828,151 99,091,285 96,477,870 93,980,587 91,592,649
Simple Interest I/L 28,607,688 28,074,110 27,558,306 27,059,459 26,576,800
Rule of 78ths I/L 380,115 375,908 371,790 367,760 363,814
Investments
U. S. Government Securities 10,371,871 9,606,763 8,838,430 8,065,953 7,288,367
Municipals
Nontaxable 7,289,009 7,059,146 6,840,577 6,632,560 6,434,417
Taxable 1,311,551 1,235,780 1,166,128 1,101,999 1,042,861
Mortgage Backed Securities 1,815,855 1,738,015 1,665,329 1,597,369 1,533,748
Certificates of Deposit
< 182 days 2,634,167 2,627,550 2,609,327 2,602,834 2,596,374
182 - 364 days 5,013,994 5,001,565 4,989,197 4,976,900 4,964,644
1 year - 2 years 48,879,204 48,314,863 47,763,020 47,223,276 46,695,244
2 years - 3 years 14,238,364 14,004,423 13,777,347 13,556,858 13,342,692
3 years - 4 years 6,570,842 6,419,480 6,273,383 6,132,315 5,996,051
4 years - 5 years 3,246,753 3,177,297 3,110,355 3,045,809 2,983,544
5 years 41,728,732 40,341,402 39,019,773 37,760,019 36,558,574
</TABLE>
<PAGE>
Page 17 of 19
Form 10-Q
Benchmark Bankshares, Inc.
June 30, 2000
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
Independent Accountant's Review Report
Item 6 Report on Form 8-K
No reports on Form 8-K have been filed during the
quarter ended June 30, 2000.
<PAGE>
Page 18 of 19
INDEPENDENT ACCOUNTANT'S REVIEW REPORT
Board of Directors
Benchmark Bankshares, Inc.
Kenbridge, Virginia
We have reviewed the accompanying 10Q filing including the balance
sheet of Benchmark Bankshares, Inc. (a corporation) as of June 20, 2000 and the
related statements of income and cash flows for the three month period then
ended, in accordance with Statements on Standards for Accounting and Review
Services issued by the American Institute of Certified Public Accountants. All
information included in these financial statements is the representation of the
management of Benchmark Bankshares, Inc.
A review consists principally of inquiries of Company personnel and
analytical procedures applied to financial data. It is substantially less in
scope than an audit in accordance with generally accepted auditing standards,
the objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the accompanying financial statements in order for them
to be in conformity with generally accepted accounting principles.
Our review was made for the purpose of expressing limited assurance
that there are no material modifications that should be made to the financial
statements in order for them to be in conformity with generally accepted
accounting principles. The additional required information included in the 10Q
filing for June 30, 2000 is presented only for supplementary analysis purposes.
Such information has been subjected to the inquiry and analytical procedures
applied in the review of the basic financial statements, and we are not aware of
any material modifications that should be made thereto.
Creedle, Jones, and Alga, P. C.
Certified Public Accountants
August 1, 2000
<PAGE>
Page 19 of 19
Form 10-Q
Benchmark Bankshares, Inc.
June 30, 2000
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 1, 2000 Ben L. Watson, III
President and CEO
Date: August 1, 2000 Janice W. Pernell
Cashier and Treasurer
