Exhibit 99.1
COMMONWEALTH BANKSHARES, INC., NORFOLK, VA, ANNOUNCES RECORD EARNINGS
FOR THE QUARTER AND YEAR ENDED DECEMBER 31, 2004
NORFOLK, Va., Feb. 28 /PRNewswire-FirstCall/ -- Commonwealth Bankshares,
Inc. (Nasdaq: CWBS) today reported record quarter end earnings of $906.4
thousand, an increase of 100.1% over the $452.9 thousand reported in the fourth
quarter of 2003. For the year ended December 31, 2004, the Company reached a
record $3.1 million in net income, an increase of 22.0% over the $2.5 million
earned during the comparable period in 2003. On a per share basis, diluted
earnings increased 42.1% to .27 cents for the quarter ended December 31, 2004
compared to .19 cents for the same period in 2003. Diluted earnings per share
equaled 1.16 cents and 1.03 cents for the twelve months ended December 31, 2004
and 2003, respectively. Per share results reflect the issuance of 943,396 shares
of new capital stock sold during the fourth quarter of 2004.
Edward J. Woodard, Jr., CLBB, Chairman of the Board, President and Chief
Executive Officer, commented, "2004 was an exceptional year. I am particularly
proud of our achievements this year, both financially as well as operationally.
We experienced record earnings, on both a quarterly and annual basis along with
significant growth in our earning assets. We expanded our mortgage business,
with the acquisition of Community Home Mortgage of Virginia, Inc., a mortgage
brokerage firm that originates, processes and sells residential mortgages on a
servicing released basis throughout Virginia and Maryland. We successfully
raised $15 million in additional capital, allowing us to continue our strong
growth momentum and allowing us to better serve our customers by increasing our
legal lending limit to over $6.4 million. The loyalty and continued support of
our shareholders and customers has provided the foundation for our growth and
success. We look forward to continuing to execute on a strategy we believe will
enhance the long-term growth of the company and value for our stockholders."
The Company's record earnings resulted in favorable profitability ratios.
Profitability as measured by the Company's return on average assets (ROA) was
1.01% for the quarter ended December 31, 2004, up 38 basis points from 0.63% for
the fourth quarter 2003. Return on average equity (ROE) increased 87 basis
points to 10.52% for the quarter ended December 31, 2004 as compared to 9.65%
for the quarter ended December 31, 2003. Average assets increased $73.5 million
or 25.7% from the quarter ended December 31, 2003 to December 31, 2004. Average
equity for the quarter increased $15.7 million or 83.6% as a result of the
additional capital raised. For the year ended December 31, 2004, ROA was 0.95%
and ROE was 13.00%.
A fundamental source of the Company's earnings, net interest income, is
defined as the difference between income on earning assets and the cost of funds
supporting those assets. Significant categories of earning assets are loans and
securities, while deposits and short-term borrowings represent the major portion
of interest bearing liabilities. The level of net interest income is impacted
primarily by variations in the volume and mix of these assets and liabilities,
as well as changes in interest rates when compared to previous periods of
operations. Net interest income was $13.3 million for the year ended December
31, 2004, an increase of $2.3 million or 21.4% over the comparable period in
2003. For the quarter ended December 31, 2004, net interest income was $3.9
million, up 41.6% over the quarter ended December 31, 2003.
Total interest income was $22.0 million for the year ended December 31,
2004, an increase of $2.6 million, or 13.4% over the same period of 2003. For
the quarter ended December 31, 2004, total interest income was $6.1 million, up
27.0% from the quarter ended December 31, 2003. Strong loan demand continued
into the fourth quarter of 2004 generating record increases in interest income.
Interest income on loans increased $2.9 million or 15.5% to $21.4 million for
the year ended December 31, 2004. For the three months ended December 31, 2004,
interest income on loans increased 30.0% to $6.0 million compared to $4.6
million for the comparable period in 2003.
Interest expense of $8.6 million for the year ended December 31, 2004
represented a $245.4 thousand increase from the comparable period in 2003. For
the quarter ended December 31, 2004, interest expense was $2.3 million, up
$161.0 thousand from the quarter ended December 31, 2003. This slight increase
is due to the decrease in the Company's costs of deposits, which was offset by
the record increase in the Company's average interest bearing liabilities.
Average deposits and short term borrowings increased $20.4 million and $22.3
million, respectively, from December 31, 2003 to December 31, 2004.
Commonwealth Bankshares exceeded its goal for asset growth during 2004.
Total assets at December 31, 2004 reached a new high of $374.1 million, up 17.5%
or $55.8 million from $318.3 million at December 31, 2003. Total loans, the
Company's largest and most profitable asset, ended the year at a record $315.8
million, up $85.7 million or 37.3% from December 31, 2003. The favorable
financing environment along with the efforts of the Company's officers to
develop new loan relationships combined with the support of existing customers
continue to generate record loan demand for the Company.
About Commonwealth Bankshares
Commonwealth Bankshares, Inc. is the parent of Bank of the Commonwealth
which opened its first office in Norfolk, Virginia, in 1971, creating a
community bank that was attuned to local issues and could respond to the needs
of local citizens and businesses. Over the last three decades, the Company's
growth has mirrored that of the communities it serves. Today, Bank of the
Commonwealth has nine bank branches strategically located throughout the Hampton
Roads region and an extensive ATM network for added convenience. The Company
continues to grow and develop new services, such as Online Banking and a
Corporate Cash Management program and at the same time, maintain the
longstanding commitment to personal service. Our slogan conveys our true
corporate philosophy: "When you bank with us, you bank with your neighbors."
Bank of the Commonwealth offers insurance services through its subsidiary BOC
Insurance Agencies of Hampton Roads, Inc., title services through BOC Title of
Hampton Roads, Inc. and mortgage funding services through one of its newest
subsidiaries, Community Home Mortgage of Virginia, Inc. Additional information
about the company, its products and services, can be found on the Web at
http://www.bankofthecommonwealth.com.
This press release contains forward-looking statements. Words such as
"anticipates," " believes," "estimates," "expects," "intends," "should," "will,"
variations of such words and similar expressions are intended to identify
forward-looking statements. These statements reflect management's current
beliefs as to the expected outcomes of future events and are not guarantees of
future performance. These statements involve certain risks, uncertainties and
assumptions that are difficult to predict with regard to timing, extent,
likelihood and degree of occurrence. Therefore, actual results and outcomes may
materially differ from what may be expressed or forecasted in such
forward-looking statements. Factors that could cause a difference include, among
others: changes in the national and local economies or market conditions;
changes in interest rates, deposit flows, loan demand and asset quality,
including real estate and other collateral values; changes in banking
regulations and accounting principals, policies or guidelines; and the impact of
competition from traditional or new sources. These and other factors that may
emerge could cause decisions and actual results to differ materially from
current expectations. Commonwealth Bankshares, Inc. undertakes no obligation to
revise, update, or clarify forward-looking statements to reflect events or
conditions after the date of this release.
Commonwealth Bankshares, Inc. and Subsidiaries
Selected Financial Information (Unaudited)
Three Months Ended Twelve Months Ended
----------------------------- -----------------------------
(in thousands, except per December 31, December 31, December 31, December 31,
share data) 2004 2003 2004 2003
- ----------------------------------- ------------- ------------- ------------- -------------
Operating Results:
Interest Income $ 6,147 $ 4,843 $ 21,957 $ 19,364
Interest Expense 2,257 2,095 8,625 8,379
Net interest income 3,890 2,748 13,332 10,985
Provision for loan losses 590 150 1,695 525
Noninterest income 997 399 3,068 1,678
Noninterest expense 2,977 2,178 10,098 8,392
Income before provision for
income taxes 1,320 819 4,607 3,746
Provision for income taxes 414 366 1,506 1,204
Net income $ 906 $ 453 $ 3,101 $ 2,542
Per Share Data:
Basic earnings $ 0.32 $ 0.24 $ 1.42 $ 1.44
Diluted earnings $ 0.27 $ 0.19 $ 1.16 $ 1.03
Book value $ 12.40 $ 10.16 $ 12.40 $ 10.16
Dividends per share $ 0.05 $ 0.04 $ 0.20 $ 0.16
Basic weighted average
shares outstanding 2,835,763 1,872,020 2,181,915 1,771,556
Diluted weighted average
shares outstanding 3,550,351 2,823,423 2,929,842 2,824,703
Shares outstanding at
period-end 2,984,794 1,888,271 2,984,794 1,888,271
At Period End
-----------------------------
December 31, December 31,
2004 2003
------------- -------------
Month End Balance:
Assets $ 374,061 $ 318,295
Loans* 315,755 230,050
Loans held for sale 31,107 56,132
Investment securities 6,945 12,431
Deposits 277,632 250,658
Shareholders' equity 37,024 19,191
YTD Average Balance:
Assets $ 326,667 $ 277,970
Loans* 264,815 214,731
Loans held for sale 33,255 29,092
Investment securities 8,995 14,214
Deposits 260,027 239,726
Shareholders' equity 23,861 17,238
Ratios:
Return on average assets 0.95% 0.91%
Return on average shareholders' equity 13.00% 14.75%
Shareholders' equity to total assets 9.90% 6.03%
Loan loss allowance to loans* 0.90% 1.09%
Loan loss allowance to non-performing assets 607.92% 63.53%
Non-performing assets to total assets 0.12% 1.24%
Net interest margin (tax equivalent basis) 4.29% 4.24%
Bank's Tier 1 capital to average assets 11.18% 8.10%
Bank's Tier 1 capital to risk weighted assets 12.84% 8.64%
Bank's Total capital to risk weighted assets 13.75% 9.61%
* Net of unearned income and loans held for sale
SOURCE Commonwealth Bankshares, Inc.
-0- 02/28/2005
/CONTACT: E.J. Woodard, Jr., CLBB, Chairman of the Board, President, and
Chief Executive Officer, of Commonwealth Bankshares, Inc., +1-757-446-6904, or
ewoodard@bocmail.net/
/Web site: http://www.bankofthecommonwealth.com/
(CWBS)