-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QX6IP8ig4e3zLauz37nuksWNmrewWXLaHtZXV6Fr92RV5CczjCNzvn0u8f/Np8/o wcm1fWjdoyBoF/1POzckwQ== 0000804563-01-500005.txt : 20010509 0000804563-01-500005.hdr.sgml : 20010509 ACCESSION NUMBER: 0000804563-01-500005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010507 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BENCHMARK BANKSHARES INC CENTRAL INDEX KEY: 0000804563 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 541460991 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-18445 FILM NUMBER: 1623617 BUSINESS ADDRESS: STREET 1: 100 S BROAD ST CITY: KENBRIDGE STATE: VA ZIP: 23944 BUSINESS PHONE: 8046768444 MAIL ADDRESS: STREET 1: 100 S BROAD ST CITY: KENBRIDGE STATE: VA ZIP: 23944 10-Q 1 sec10q1-2001.txt BENCHMARK QUARTER ENDED 3/31/01 Page 1 of 17 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 quarterly period ended March 31, 2001. [ ] 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 54-1460991 -------- ---------- (State or Other Jurisdiction of (I.R.S. Employer I.D. 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: 2,980,714.833 Page 2 of 17 Form 10-Q Benchmark Bankshares, Inc. Part I - Table of Contents March 31, 2001 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 3 of 17 Form 10-Q Benchmark Bankshares, Inc. Consolidated Balance Sheet (Unaudited) (Audited) March 31, December 31, 2001 2000 ---- ---- Assets Cash and due from banks $ 6,283,859 $ 5,587,737 Securities Federal Agency obligations 11,023,000 13,702,620 State and municipal obligations 9,757,392 9,397,487 Mortgage backed securities 1,608,205 1,621,527 Other securities 195,490 200,492 Federal funds sold 6,506,000 4,281,000 Loans 170,234,305 164,717,269 Less Unearned interest income (5,445) (10,982) Allowance for loan losses (1,708,536) (1,667,723) ------------- ------------- Net Loans 168,520,324 163,038,564 Premises and equipment - net 3,898,244 3,752,830 Accrued interest receivable 1,726,930 1,578,538 Deferred income taxes 382,050 489,635 Other real estate 787,899 808,508 Other assets 856,465 793,598 ------------- ------------- Total Assets $211,545,858 $205,252,536 ============= ============= Page 4 of 17 Form 10-Q Benchmark Bankshares, Inc. Consolidated Balance Sheet (Unaudited) (Audited) March 31, December 31, 2001 2000 ---- ---- Liabilities and Stockholders' Equity Deposits Demand (noninterest-bearing) $ 19,647,391 $ 20,033,199 NOW accounts 19,715,074 22,356,687 Money market accounts 7,473,309 7,384,741 Savings 10,168,446 9,665,332 Time, $100,000 and over 21,593,587 19,364,111 Other time 108,410,074 102,392,747 ------------- ------------- Total Deposits 187,007,881 181,196,817 Accrued interest payable 974,431 984,159 Accrued income tax payable 319,176 11,441 Dividends payable - 541,120 Other liabilities 388,448 333,808 ------------- ------------- Total Liabilities 188,689,936 183,067,345 Stockholders' Equity Common stock, par value $.21 per share, authorized 4,000,000 shares; issued and outstanding 03-31-01 2,980,715.534, issued and outstanding 12-31-00 3,006,219.501 shares 625,951 631,307 Capital surplus 4,165,381 4,404,047 Retained earnings 17,961,142 17,281,168 Unrealized security gains net of tax effect 103,448 (131,331) ------------- ------------- Total Stockholders' Equity 22,855,922 22,185,191 ------------- ------------- Total Liabilities and Stockholders' Equity $211,545,858 $205,252,536 ============= ============= Note: The balance sheet at December 31, 2000 has been derived from the audited financial statements at that date. See notes to consolidated financial statements. Page 5 of 17 Form 10-Q Benchmark Bankshares, Inc. Consolidated Statement of Income and Comprehensive Income (Unaudited) Three Months Ended March 31, 2001 2000 ---- ---- Interest Income Interest and fees on loans $3,884,193 $3,422,120 Interest on U. S. Government obligations 224,734 250,126 Interest on State and municipal obligations 113,809 124,098 Interest on Federal funds sold 74,818 11,912 ----------- ----------- Total Interest Income 4,297,554 3,808,256 Interest Expense Interest on deposits 2,147,621 1,793,669 Interest on Federal funds purchased - 54,727 ----------- ----------- Total Interest Expense 2,147,621 1,848,396 ----------- ----------- Net Interest Income 2,149,933 1,959,860 Provision for Loan Losses 62,778 35,687 ----------- ----------- Net Interest Income after Provision 2,087,155 1,924,173 Noninterest Income Service charges, commissions, and fees on deposits 156,024 122,877 Other operating income 81,897 100,327 Gains (Losses) on sale of securities 2,434 (3,308) ----------- ----------- Total Noninterest Income 240,355 219,896 Noninterest Expense Salaries and wages 692,927 626,170 Employee benefits 170,245 142,220 Occupancy expenses 84,305 70,206 Furniture and equipment expense 57,971 46,838 Other operating expenses 335,737 295,699 ----------- ----------- Total Noninterest Expense 1,341,185 1,181,133 ----------- ----------- Net Income before Taxes 986,325 962,936 Income Taxes 305,815 296,889 ----------- ----------- Net Income 680,510 666,047 Other Comprehensive Income, Net of Tax Net unrealized holding gain (loss) arising during period 234,779 (10,745) ----------- ----------- Comprehensive Income $ 915,289 $ 655,302 =========== =========== Net Income per Share $ 0.23 $ 0.22 =========== =========== See notes to consolidated financial statements. Page 6 of 17 Form 10-Q Benchmark Bankshares, Inc. Condensed Consolidated Statement of Cash Flows (Unaudited) Three Months Ended March 31, 2001 2000 ---- ---- Cash Provided by Operating Activities $1,045,126 $ 624,047 Cash Provided by Financing Activities Decrease in Federal funds purchased - (7,035,000) Net increase (decrease) in demand deposits and interest-bearing transaction accounts (3,027,421) 1,160,262 Net increase (decrease) in savings and money market deposits 591,682 (642,964) Net increase in certificates of deposit 8,246,803 7,359,204 Decrease in dividends payable (541,120) (482,433) Sale of stock 22,140 55,934 Purchase of stock (266,159) (66,625) ----------- ----------- Total Cash Provided by Financing Activities 5,025,925 348,378 Cash Used in Investing Activities Purchase of securities (500,000) (465,458) Maturity (Call) of securities 3,192,531 4,750,389 Net increase in loans (5,517,036) (2,365,854) Purchase of premises and equipment (325,424) (386,725) ----------- ----------- Total Cash Provided (Used) by Investing Activities (3,149,929) 1,532,352 ----------- ----------- Increase (Decrease) in Cash and Cash Equivalents $2,921,122 $2,504,777 =========== =========== See notes to consolidated financial statements. Page 7 of 17 Form 10-Q Benchmark Bankshares, Inc. Notes to Consolidated Financial Statements March 31, 2001 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) Consolidated Financial Statements. 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. Page 8 of 17 (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. 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 stockholders' 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 78ths 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. Page 9 of 17 (j) Earnings Per Share Earnings per share were computed by using the average shares outstanding for each period presented. The 2001 average shares have been adjusted to reflect the sale of 3,000 shares through the employee stock option plan at various dates during the period and the retirement of 28,504 shares. The 2000 average shares have been adjusted to reflect the sale of 7,586 shares of the Company's common stock through the employee stock option plan at various dates during the period and the retirement of 6,500 shares on January 17, 2000. The average shares of outstanding stock for the first quarter of 2001 and 2000 were 2,999,844.036 and 3,013,782.370, respectively. (k) Income Taxes. Deferred income taxes are reported for temporary differences between items of income or expense reported in the financial statements and those reported for income tax purposes. Deferred taxes also reflect the impact of the unrealized security losses which are reflected on the balance sheet only, pursuant to FAS 115 guidelines. The differences relate principally to the provision for loan losses, depreciation, and unrealized security losses. The table below reflects the components of the Net Deferred Tax Asset account as of March 31, 2001: Deferred tax assets resulting from loan loss reserves $474,392 Deferred tax asset resulting from deferred compensation 81,566 Deferred tax liabilities resulting from depreciation (120,617) Deferred tax liability resulting from unrealized securities losses (53,291) --------- Net Deferred Tax Asset $382,050 ========= Selected Quarterly Data (Unaudited) 2000 First Second Third Fourth Quarter Quarter Quarter Quarter Net Interest Income $1,959,860 $2,086,262 $2,105,102 $2,268,551 Provision for Loan Losses 35,687 91,579 55,923 17,998 Noninterest Income 219,896 263,295 261,566 261,881 Noninterest expense 1,181,133 1,284,077 1,260,402 1,343,178 Income Before Extraordinary Item and Cumulative Effect of Change in Accounting Principle 666,047 669,338 721,352 788,324 Net Income 666,047 669,338 721,352 788,324 Per Share $ 0.22 $ 0.22 $ 0.24 $ 0.27 Page 10 of 17 1999 First Second Third Fourth Quarter Quarter Quarter Quarter Net Interest Income $1,817,890 $1,918,081 $1,989,144 $2,024,044 Provision for Loan Losses 28,897 122,722 203,717 250,694 Noninterest Income 139,968 190,802 222,054 189,548 Noninterest Expense 1,032,094 1,080,201 1,080,358 1,124,490 Income Before Extraordinary Item and Cumulative Effect of Change in Accounting Principle 626,694 635,220 648,995 600,598 Net Income 626,694 635,220 648,995 600,598 Per Share $ 0.21 $ 0.21 $ 0.22 $ 0.19 Page 11 of 17 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations FIRST QUARTER 2001 Earnings Summary Net income of $680,510 for the first quarter of 2001 increased $14,463 or 2.17% as compared to net income of $666,047 earned during the first quarter of 2000. Earnings per share of $.23 as of March 31, 2001 increased by $.01 or 4.55% over the same period in 2000. The annualized return on average assets of 1.31% decreased 4.5% while the annualized return on average equity of 12.09% decreased 6.1% when comparing first quarter 2001 results with those of first quarter 2000. The Bank experienced steady growth in the first quarter of 2001 in both loans and deposits. Since year end, loans have grown by $5,517,036 for an annualized growth rate of 13.4% while deposits have grown $5,811,064 for an annualized growth rate of 12.8%. Currently, the loan to deposit ratio is 91.0%. Interest Income and Interest Expense Total interest income of $4,297,554 for the first quarter of 2001 increased $489,298 or 12.8% over interest income of $3,808,256 recorded during the first quarter of 2000. The major area of increase was in interest and fees on loans, which was a direct result from the growth of the loan portfolio. Due to a strong loan demand, the investment portfolio has changed as investments in short-term instruments began to reflect smaller investment balances. These short-term investments typically earn at a lesser rate than loans. Total interest expense in the first quarter of 2001 increased to a level of $2,147,621. This amounted to an increase of $299,225 or 16.2% over the level reached during the first quarter of 2000. This increase in interest expense resulted from growth in interest-bearing deposit accounts. Provision for Loan Losses While the Bank's loan loss experience ratio remains low, management continues to set aside provisions to the loan loss reserve. During the first quarter of 2001, the Bank increased the loan loss reserve by $40,813 to a level of $1,708,536 or 1.00% of the outstanding loan balance. At year end 2000, the reserve level amounted to $1,547,024 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 March 31, 2001, the Bank had $1,458,964 in nonperforming loans or .86% of the loan portfolio. The amount of non-secured loans in this category amounted to $2,610. Noninterest Income and Noninterest Expense Noninterest income of $240,355 increased $20,459 or 9.3% for the first quarter of 2001 as compared to the level of $219,896 reached during the first quarter of 2000. The increase results from an expanded customer base as the existing branches continue to grow in trade area business, and the three new offices start to see a measurable increase in customers served. Page 12 of 17 Noninterest expense of $1,341,185 increased $160,052 or 13.6% for the first quarter of 2001 as compared to the level of $1,181,133 reached during the first quarter of 2000, as all areas of operation had additional expense related to the staffing and support required for an expanding customer base. Off-Balance-Sheet Instruments/Credit Concentrations The Bank 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 March 31, 2001, the Bank had $1,336,971 outstanding letters of credit. This represents a $60,500 or 4.3% decrease over the year end level. These instruments are based on the financial strength of the customer and the existing relationship between the Bank and the customer. The maturities of these letters are as follows: March 31, 2002 $1,334,971 2003 2,000 Liquidity As of the end of the first quarter of 2001, $51,435,735 or 30.2% of gross loans will mature or are subject to repricing within one year. These loans are funded in part by $21,593,587 in certificates of deposit of $100,000 or more of which $11,947,433 mature in one year or less. Currently, the Bank has a maturity average ratio for the next twelve months of 75.8% when comparing earning asset and certificates of deposit maturities. At year end 2000, $50,959,000, or 30.94% of gross loans, were scheduled to mature or were subject to repricing within one year and $61,248,000 in certificates of deposit were scheduled to mature during 2001. Capital Adequacy Total stockholder equity was $22,855,922 or 10.8% of total assets as of March 31, 2001. This compared to $22,185,191 or 10.8% of total assets as of December 31, 2000. Primary capital (stockholders' equity plus loan loss reserves) of $24,564,458 represents 11.61% of total assets as of March 31, 2001 as compared to $23,852,914 or 11.62% of total assets as of December 31, 2000. The equity ratio remained stable as earnings offset repurchase of the Company's common stock. Page 13 of 17 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 March 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. March 31, 2000
Current Categories 2002 2003 2004 2005 2006 Thereafter Value ---------- ---- ---- ---- ---- ---- ---------- ----- Loans Commercial $20,721,455 $ - $ - $ - $ - $ - $ 20,721,455 Mortgage 43,452,095 21,759,350 31,960,561 22,826,164 21,003,289 6,523,294 119,793,341 Simple Interest I/L 14,645,696 10,082,340 6,571,466 3,569,193 1,167,912 194,802 30,110,690 Rule of 78ths I/L 112,351 18,343 2,300 - - - 109,786 Investments U. S. Government Agencies 686,050 1,186,050 2,157,925 2,528,063 1,454,875 7,101,998 11,007,090 Municipals Nontaxable 823,900 515,741 1,660,308 305,999 305,999 6,138,568 8,770,927 Taxable 61,693 61,693 61,693 556,572 31,450 641,525 1,006,464 Mortgage Backed Securities 281,200 231,352 225,048 201,688 293,896 551,348 1,608,205
Page 14 of 17
Current Categories 2002 2003 2004 2005 2006 Thereafter Value ---------- ---- ---- ---- ---- ---- ---------- ----- Certificates of Deposits < 182 days 2,564,540 - - - - - 2,508,108 182 - 364 days 5,081,519 - - - - - 4,832,636 1 year - 2 years 52,108,408 7,416,709 - - - - 56,186,784 2 years - 3 years 3,420,132 10,333,264 162,175 - - - 12,641,378 3 years - 4 years 1,778,615 976,355 5,680,511 58,959 - - 7,385,075 4 years - 5 years 925,173 616,719 834,638 966,956 105,676 - 2,976,608 5 years 5,120,400 5,787,183 10,423,423 8,695,371 20,320,224 421,254 41,501,581
In Table Two, the cash flows are present value discounted by predetermined factors to measure the impact on the financial products portfolio at twelve month intervals. Variable Interest Rate Disclosure Benchmark Bankshares, Inc. March 31, 2001
Valuation of Securities No Valuation of Securities 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 $ 21,028,869 $ 20,874,405 $ 20,721,455 $ 20,570,000 $ 20,420,023 Mortgage 126,038,375 122,847,124 119,793,341 116,869,127 114,067,139 Simple Interest I/L 31,236,116 30,663,975 30,110,690 29,575,397 29,057,281 Rule of 78ths I/L 111,959 110,862 109,786 108,730 107,695 Investments U. S. Government Securities 11,592,884 11,397,946 11,007,090 11,020,288 10,152,673 Municipals Nontaxable 9,500,285 9,155,602 8,770,927 8,237,861 7,261,097 Taxable 1,107,848 1,054,868 1,006,464 962,433 886,660 Mortgage Backed Securities 1,755,903 1,682,054 1,608,205 1,534,356 1,386,658 Certificates of Deposit < 182 days 2,532,955 2,520,485 2,508,108 2,495,821 2,483,625 182 - 364 days 4,927,053 4,879,499 4,832,636 4,786,450 4,740,929 1 year - 2 years 57,407,968 56,790,884 56,186,784 55,595,268 55,015,948 2 years - 3 years 13,073,290 12,854,366 12,641,378 12,434,108 12,232,349 3 years - 4 years 7,736,893 7,557,856 7,385,075 7,218,271 7,057,178 4 years - 5 years 3,125,209 3,049,439 2,976,608 2,906,567 2,839,177 5 years 44,456,654 42,942,726 41,501,581 40,128,911 38,820,708
Only financial instruments that do not have daily price adjustment capabilities are herein presented. Page 15 of 17 Form 10-Q Benchmark Bankshares, Inc. March 31, 2001 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 March 31, 2001. Page 16 of 17 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 March 31, 2001 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 March 31, 2001 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 April 30, 2001 Page 17 of 17 Form 10-Q Benchmark Bankshares, Inc. March 31, 2001 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: May 7, 2001 Ben L. Watson, III President & CEO Date: May 7, 2001 Janice W. Pernell Cashier and Treasurer -----END PRIVACY-ENHANCED MESSAGE-----