Benchmark Bankshares, Inc. (BMBN), the Kenbridge-based holding company for Benchmark Community Bank, announced unaudited results for 2018. Net income for the year amounted to $9,136,406, a 49.03 percent increase over net income of $6,130,621 earned in 2017. Earnings per share for the year amounted to $1.79 per share, up from $1.19 per share last year, while return on equity increased from 9.16 percent to 13.01 percent and return on average assets increased from 1.08 percent to 1.49 percent.

The bank earned $2,630,830, or $0.51 per share, during the fourth quarter of 2018 compared to $698,328, or $0.14 per share, for the fourth quarter of 2017. Excluding the one-time, non-cash charge of $815,974, earnings amounted to $1,514,302, or $0.29 per share, for 2017. A loan loss provision of $226,760 was made during the fourth quarter, with no loan loss provision during the fourth quarter last year. Write-downs and other expenses related to foreclosed property amounted to $19,943 this year compared to $676,961 for the same period last year.

In 2017, net income was impacted by 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). Excluding the impact of this one-time deferred tax adjustment, net income amounted to $6,946,595, or $1.35 per share, for 2017.

Total loans at year-end amounted to $533.8 million, a $47.0 million increase over the past 12 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 $568.8 million at year-end were up $44.9 million from last year. Based on June 2018 deposit numbers from the FDIC, the bank continues to be the largest depository institution in the seven Virginia counties in which it operates, maintaining a market share of approximately 22 percent 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 $12.9 million, interest-bearing checking accounts increased by $13.5 million, savings and money market accounts were up $6.9 million, and time deposits grew by $11.6 million.

The Federal Reserve raised interest rates four times during the year, increasing the prime rate from 4.50 percent to 5.50 percent. Interest expense for 2018 amounted to $2.4 million, up 28.7 percent from the $1.8 million realized during 2017. The bank’s total yield on loans, at 5.42 percent, was up slightly from 5.32 percent last year, while the cost of funds rose from 0.38 percent to 0.45 percent. The end result was an increase in net margin from 4.59 percent to 4.72 percent.

The bank incurred net charge-offs of $428 thousand, similar to the $478 thousand charged off during 2017. The bank also incurred $769 thousand in write-downs and other expenses related to foreclosed properties, down from the $819 thousand in expenses incurred last year.

Nonaccrual loans declined from $1.5 million to $745 thousand while other real estate owned declined from $3.4 million to $2.0 million as management was able to sell foreclosed properties that had been on the books for several years. Although asset quality remains strong and past due loans have remained low, the bank provisioned a total of $932 thousand to the loan loss reserve during the year, compared to a total provision of $502 thousand provision during 2017. As of Dec. 31, 2018, the reserve for loan losses totaled $5.2 million, or 0.98 percent of total loans. This compares to a reserve of $4.7 million, or 0.97 percent of total loans one year ago.

“I am very pleased with the results our outstanding and dedicated team of bankers has produced in 2018” stated CEO Jay Stafford. “The bank is well-positioned to continue to grow, contribute to the communities we serve, and further increase shareholder value in 2019.”