Benchmark Bankshares, Inc. Reports 1st Quarter Earnings

May 4, 2022 - Benchmark Bankshares, Inc. (BMBN), the Kenbridge-based holding company for Benchmark Community Bank, announced unaudited results for the first quarter of 2022. Net income of $2,027,908 was down from the $2,775,123 earned during the first quarter of 2021, while earnings per share decreased from $0.61 to $0.45 for the period.

"Lending activity through the first quarter has been strong," observed Jay A. Stafford, President and CEO. "Although we no longer have benefit of the Paycheck Protection Program (PPP), total loans increased by $32.9 million during the quarter as demand for residential mortgage loans and commercial real estate loans remains high." Stafford added, "On the other hand, we knew that losing the PPP loans would impact earnings heading into 2022, but we were still able to increase total interest income from $8.49 million to $8.58 million for the quarter."

Stafford continued, "Earnings were down for the quarter primarily from several unusual items, including losses on trading securities, check fraud losses, and a large contribution to our employee stock ownership plan; however, I believe that the core operation of the bank remains strong."

Notable Items:

  • Interest and fees on business loans declined by $549,064 when comparing the first quarter of 2022 to the same period last year. Most of this decline resulted from the Bank’s Paycheck Protection Program loans paying off during 2021.
  • Due to the volatile interest rate environment during the quarter, the Bank experienced mark-to-market losses of $295,644 in securities held for trading during the quarter.
  • A total of $180,000 was expensed to the Bank’s employee stock ownership plan ("KSOP") for stock repurchases from several shareholders. No KSOP expenses were incurred during the first quarter of 2021.
  • The Bank experienced $147,323 in losses from fraudulent checks during the quarter. While management expects to recover a portion of these losses, the recovery process can take several months. Losses during the first quarter of 2021 amounted to just $2,032.
  • A total of $87,693 was provisioned to the loan loss reserve during the quarter, compared to a provision of $70,411 made during the first quarter of 2021.
  • Interest expense on borrowings, used to support the stock repurchase program, amounted to $33,722 for the period, down from $50,832 recognized last year during the same period.
  • Total loans are up $32.9 million for the quarter, with total loans up by $48.1 million over the last twelve months.
  • Deposit growth during the first quarter amounted to $45.9 million, with total deposits up $128.1 million over the past twelve months. As with prior years, this growth has been driven by PPP loans and government backed stimulus payments to both individuals and municipalities.
  • Total interest income increased from $8.49 million to $8.58 million during the quarter, while net interest income rose from $$7.73 million to $7.99 million through increased loan demand and the purchase of additional investment securities.

As of December 31, 2021, total assets were $1.04 billion, an increase of $169.8 million, or 19.5%, over the December 31, 2020 balance of $870.8 million. Over the past twelve months, total loans held for investment have increased by $28.6 million, or 4.6%, while total deposits have increased by $161.9 million, or 20.7%.

Shareholders’ equity, net of unrealized gains on investment securities, was $83.3 million as of December 31, 2021, an increase of $8.0 million, or 10.6%, over the December 31, 2020 balance of $75.3 million. All capital ratios exceeded regulatory guidelines for a well-capitalized financial institution under the Basel III regulatory requirements as of December 31, 2021.

Key Financial Ratios:

  • Return on average equity (ROAE) decreased from 14.33% to 9.65% for the quarter.
  • Return on average assets (ROAA) decreased from 1.21% to 0.79% for the quarter.
  • Yield on loans decreased from 5.30% to 4.91%.
  • The bank’s cost of funds decreased from 0.33% to 0.20%.
  • Net interest margin was down from 3.63% to 3.32% due to a large amount of cash holdings.

As of March 31, 2022, the current book value of the company was $18.20 per share compared to $17.42 one year ago. The closing share price at quarter-end was $23.33 per share, which represents a price-to-book trading ratio of 128%. The company currently has 4,518,422 shares outstanding. The common stock of Benchmark Bankshares, Inc. trades on the OTC Pink marketplace under the symbol BMBN. Any stockbroker can assist with purchases of the company's stock, as well as with sales of holdings.

Benchmark Community Bank, founded in 1971, is headquartered in Kenbridge, VA. It is the company's sole subsidiary and operates a total of 17 banking offices throughout central Southside Virginia and northern North Carolina.

Consolidated Statements of Financial Condition & Condensed Consolidated Statement of Earnings

Contact: Helen Person, VP/Director of Marketing & Public Relations
(434) 676-2666 ext. 1103
[email protected]

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