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Benchmark Bankshares, Inc. (BMBN), the Kenbridge-based holding company for Benchmark Community Bank, announced unaudited results for the quarter and year ending December 31, 2020.

Net income for the fourth quarter of 2020 amounted to $2,777,307, or 61 cents per share, compared to $2,556,876, or 56 cents per share, posted for the fourth quarter of 2019. Net income for the year amounted to $10,218,781, an 8.10% increase over net income of $9,452,659 earned in 2019.

Notable Items:

• Net interest income increased by 6.72%, from $28.79 million to $30.73 million, when comparing 2020 to 2019.

• Noninterest income for the year increased from $6.8 million to $7.5 million as the bank’s mortgage demand and financial services business remained strong.

• The bank made almost 1,000 loans, totaling approximately $46 million, under the Paycheck Protection Program during 2020. These loans carry a required interest rate of 1%, which put downward pressure on net interest margin; however, the bank earned close to $1.5 million in fees from these loans during the year.

• The federal funds interest rate was cut by 150 basis points, to 0.25%, in March. As a result, interest income on federal funds sold declined by $1.09 million when comparing 2020 to 2019.

• A total of $561,920 was provisioned to the loan loss reserve during the year, compared to a provision of $754,368 last year. The allowance for loan losses as a percentage of net loans was 0.91% at December 31, 2020 compared to 0.92% last December.

• The bank had $1.1 million in foreclosed property as of December 31, 2020, down from $1.9 million one year ago, while non-accrual loans declined from $944,000 to $535,000.

• Interest expense on borrowings, used to support the company’s stock repurchase program, amounted to $259,753 for the year, compared to $196,141 recognized in 2019. Total borrowings were reduced from $5.6 million to $4.9 million as of December 31, 2020.

• A total of 79,515 common shares were repurchased during 2020 at an average price of $16.05 per share. A total of 518,482 shares were repurchased at an average price of $19.83 during 2019.

• An employee stock ownership feature was added to the bank’s 401(k) plan in October 2020, allowing employees to reallocate up to 25% of their 401(k) balance into common stock of Benchmark Bankshares, Inc. The company issued 98,014 new shares as a result of this new plan feature, providing $1.3 million in capital to the holding company. The company had 4,540,592 shares outstanding as of December 31, 2020.

As of December 31, 2020, total assets were $870.8 million, an increase of $158.9 million, or 22.3%, over the December 31, 2019 balance of $711.9 million. Over the past 12 months, total loans have increased by $42.1 million, or 7.3%, while total deposits have increased by $150.5 million, or 23.7%.

Shareholders’ equity, net of unrealized gains on investment securities, was $75.3 million at December 31, 2020, an increase of $7.3 million, or 10.8%, over the December 31, 2019 balance of $67.9 million. All capital ratios exceeded regulatory guidelines for a well-capitalized financial institution under the Basel III regulatory requirements at December 31, 2020.

Key Financial Ratios:

• Return on average equity (ROAE) increased from 13.35% to 14% and return on average assets (ROAA) decreased from 1.36% to 1.31% for the year.

• Yield on loans decreased from 5.58% to 5.37%.

• The bank’s cost of funds decreased from 0.65% to 0.50%.

• Net interest margin declined from 4.49% to 4.25%.

• Current book value of the company is $16.92 per share, up from $15.22 one year ago.

The common stock of Benchmark Bankshares, Inc. trades on the OTC Pink marketplace under the symbol BMBN.