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Benchmark reports increased earnings

Benchmark Bankshares, Inc., the Kenbridge-based holding company for Benchmark Community Bank, announced earnings of $1,539,273, or $0.59 per share, for the first quarter of 2013.  This compares to net income of $1,520,287, or $0.59 per share, for the same period one year ago.  Return on average equity for the quarter was 12.82 percent and return on average assets was 1.40 percent, compared to 13.73 percent and 1.46 percent, respectively, reported for the first quarter of 2012.

Similar to one year ago, demand for new loans continues to be low despite interest rates that remain at or near record-low levels. Total loans at quarter-end amounted to $337.1 million, up $2.8 million for the quarter and $3.5 million over the past 12 months.  Despite this modest loan growth, interest and fees on loans declined during the quarter from $5.5 million to $5.3 million due to continued low interest rates.  The result was a decline in loan yield from 6.65 percent to 6.43 percent when comparing the first quarter of 2013 to the first quarter of 2012.

Deposits, however, have increased as the bank continues to attract new customers. Total deposits at quarter-end amounted to $400.5 million, a $14.2 million increase for the quarter and a $26.9 million increase from one year ago.  Time deposits have declined by $3.4 million during the past 12 months, while checking accounts have increased by $20.6 million, with $12.1 million of this increase in non-interest bearing accounts.  Savings and money market accounts have increased by $9.7 million during the same period.  The interest rate environment has continued to keep deposit rates low, lowering the bank’s cost of funds from 1.12 percent to 0.90 percent and reducing interest expense for the quarter from $1.0 million to $874 thousand.

Although deposit costs are down, the rapid increase in deposits have resulted in an increase in the bank’s cash position.  Federal funds sold have increased from $11.0 million to $34.5 million over the past 12 months.  While this is positive for liquidity purposes, the low yield on these funds, combined with declining interest rates on loans, decreased the bank’s interest margin from 5.15 percent to 4.86 percent for the quarter.  

Net charge offs for the quarter amounted to $42 thousand.  This compares to net charge offs of $86 thousand charged off in the first quarter of 2012.  Overall asset quality at the bank remains very strong as identified impaired loans and past due loans continue to decline.  As a result, the bank did not expense a provision to the loan loss reserve during the first quarter.  During the first quarter of 2012, the bank expensed $462 thousand to the loan loss reserve.  The current loan loss reserve stands at $4.8 million, or 1.42 percent of total loans, compared to $5.4 million, or 1.62 percent of loans, one year ago. 

President Mike Walker said, “I am pleased that our earnings remain solid, and we are attracting a significant number of new customers and transactional deposit accounts.  On the lending side, we are beginning to see signs of increased borrowing activity from individuals. Hopefully, this activity will continue and lead to a stronger overall economic environment for both individuals and businesses.” 

 The common stock of Benchmark Bankshares, Inc. trades on the NASDAQ market as an Over-the-Counter Bulletin Board stock under the symbol BMBN. Any stockbroker can assist with purchases of the company’s stock, as well as with sales of holdings.