Benchmark Bankshares, Inc. Announces Earnings for 2017
January 30, 2018 - Benchmark Bankshares, Inc. (BMBN), the Kenbridge-based holding company for Benchmark Community Bank, announced earnings of $6,130,621, or $1.19 per share, for the year ended December 31, 2017. This compares to $6,521,862, or $1.26 per share, earned during 2016. Return on average equity for the year was 9.16% and return on average assets was 1.08%, compared to 10.35% and 1.21%, respectively, reported last year.
Net income reported for 2017 included a one-time, non-cash charge of $815,974, or $0.16 per share, that was recorded as an increase in income tax expense. This charge resulted from the re-measurement of the bank’s deferred tax assets, as required by the Tax Cuts and Jobs Act (Tax Reform), which will reduce the corporate income tax rate for the bank from 34% to 21%, beginning with tax year 2018. Excluding the impact of this one-time deferred tax adjustment, net income amounted to $6,946,595, an increase of 6.51% from the prior year, while earnings per share increased by 7.14% to $1.35.
The bank earned $698,328, or $0.14 per share, during the fourth quarter of 2017 compared to $1,530,626, or $0.30 per share, for the fourth quarter of 2016. Excluding the one-time, non-cash charge of $815,974, earnings amounted to $1,514,302, or $0.29 per share. Although no loan loss provision was made during the fourth quarter, the bank did incur write downs and other expenses related to foreclosed property of $676,961 for the quarter. This compares to a loan loss provision of $130 thousand and expenses related to foreclosed assets of just $34,714 during the fourth quarter of 2016.
Total loans at year-end amounted to $486.7 million, a $38.4 million increase over the past twelve months. This growth has been driven by increased loan demand throughout our market area, including our loan production offices in North Carolina. The bank’s mortgage and home construction lending business also had another outstanding year as low interest rates continued to encourage both refinancing and new home purchases.
Total deposits of $523.9 million at year-end were up $23.2 million from last year. Based on June 2017 deposit numbers from the FDIC, the bank is the largest depository institution in the six Virginia counties in which it operates, maintaining a market share equal to 23.52% of total deposits. The bank has continued to focus on checking account growth while pursuing a less aggressive strategy for time deposits. During the year, non-interest checking accounts increased by $5.2 million, interest-bearing checking accounts increased by $10.7 million, and savings and money market accounts were up $22.9 million. This growth combined to offset a $15.6 million decline in time deposits.
The Federal Reserve continued to raise interest rates, with a 25 basis point increase in March, June, and December of 2017. Despite these increases, overall market rates continue to remain low. Interest expense for 2017 amounted to $1.9 million, down 11.18% from the $2.1 million realized during 2016. The bank’s total yield on loans, at 5.32%, was down slightly from 5.36% last year, while the cost of funds declined from 0.45% to 0.38%. The end result was an increase in margin from 4.48% to 4.59%.
The bank incurred net charge-offs of $478 thousand, up from $178 thousand charged off during 2016. The bank also incurred $818,552 in write downs and other expenses related to foreclosed properties, up from $356,064 in expenses incurred last year.
Nonaccrual loans amounted to $1.5 million, relatively unchanged from $1.6 million the year before, while other real estate owned declined from $3.8 million to $3.4 million. Although asset quality remains strong and past due loans have remained low, the bank provisioned a total of $502 thousand during the year, compared to a total provision of $130 thousand during 2016. As of December 31, 2017, the reserve for loan losses totaled $4.7 million, or 0.97% of total loans. This compares to a reserve of $4.7 million, or 1.04% of total loans one year ago.
"Although the one-time adjustment for deferred taxes had a negative impact on earnings, I am pleased to say that we had another very strong year in 2017," stated CEO Jay Stafford. "We were able to increase our dividend and all of the bank’s metrics remain strong, as net interest income and non-interest income increased over last year while our net interest margin improved."
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, and is the company's sole subsidiary which operates twelve banking offices throughout central Southside Virginia, as well as loan production offices in Wake Forest, NC and Henderson, NC. Additional information is available at the company’s website, www.BCBonline.com.
434-676-2666 ext. 1103
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