-----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, K48nrcdyBQuiYiHRmfl36DxkOT7qeyv3DX1E1jxlkiF9MOmptQ2eHG/RR1I7DiEn smMIABbxexSYwYXxcZFi3w== 0000804563-99-000003.txt : 19990812 0000804563-99-000003.hdr.sgml : 19990812 ACCESSION NUMBER: 0000804563-99-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990811 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: 99683380 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 SECOND QUARTER 1999 10-Q 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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
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
Page 16 of 18
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
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
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
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 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 EX-27 2 FDS --
9 (Replace this text with the legend) 1 $ 6-MOS DEC-31-1999 JAN-01-1999 JUN-30-1999 1 6,575,867 0 8,392,000 0 23,613,711 5,246,892 5,076,742 146,415,907 1,674,159 195,147,573 174,138,257 1,255,587 228,725 0 0 0 631,871 18,893,133 195,147,573 6,404,348 1,061,847 0 7,466,195 3,730,224 3,730,224 3,735,971 151,619 (547) 2,112,295 1,802,827 1,802,827 0 0 1,802,827 .37 .37 3.91 546,844 647,082 1,030,877 10,108,461 1,558,741 114,204 78,003 1,674,159 1,674,159 0 813,814
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