Exhibit 99.1
COMMONWEALTH BANKSHARES, INC., NORFOLK, VA, ANNOUNCES RECORD EARNINGS
FOR THE QUARTER ENDED MARCH 31, 2005
NORFOLK, Va., May 4 /PRNewswire-FirstCall/ -- Commonwealth Bankshares, Inc.
(Nasdaq: CWBS) today reported record earnings of $1.22 million, for the quarter
ended March 31, 2005, an increase of 123.30% over the $544.79 thousand reported
in the first quarter of 2004. On a per share basis, diluted earnings increased
59.09% to $0.35 for the quarter ended March 31, 2005 compared to $0.22 for the
same period in 2004. Per share results reflect the issuance of 943,396 shares of
new common stock sold during the fourth quarter of 2004 under a private
placement that raised $15 million in additional capital.
Edward J. Woodard, Jr., CLBB, Chairman of the Board, President and Chief
Executive Officer, commented, "In all my years in banking, I have never been
more proud and excited to be part of such a dynamic and growing company as Bank
of the Commonwealth. The first quarter of 2005 was another record quarter for
us, both in earnings and asset growth. Our first quarter earnings surpassed any
previously reported quarterly earnings. We continue to seek opportunities to
grow and expand our network. During the first quarter of 2005 several exciting
events transpired. We added three of the area's leading commercial lending
officers to our executive staff at Bank of the Commonwealth. With the addition
of these three executives, we are poised to grow our commercial lending
operations significantly. To capture the growing market and the real estate boom
in the Ocean View area of Norfolk, Bank of the Commonwealth recently opened a
loan origination office on Pretty Lake Avenue at East Beach and is negotiating a
lease for a permanent branch site nearby. This will be the Bank's tenth branch
site in the Hampton Roads area. In addition, we plan to open several additional
branches over the next twelve months. As we continue to grow we are looking to
diversify and search for new avenues of revenue. Bank of the Commonwealth has
expanded its title insurance services with the formation of Executive Title
Center, a wholly owned subsidiary, which is scheduled to open June 1st. In
addition to providing a considerably diverse and expanded source of fee income,
the Executive Title Center will provide a high level of responsive and
personalized service to our customers, making their real estate endeavors a
smooth transaction. 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
1.32% for the quarter ended March 31, 2005 up 58 basis points from 0.74% for the
first quarter 2004. Return on average equity (ROE) increased 193 basis points to
13.14% for the quarter ended March 31, 2005 as compared to 11.21%
for the quarter ended March 31, 2004. Average assets increased $77.41 million or
26.08% from the quarter ended March 31, 2004 to March 31, 2005. Average equity
increased $18.02 million or 92.19% as of March 31, 2005 as compared to the
comparable period in 2004, as a result of the additional capital raised in the
fourth quarter of 2004.
The record earnings were driven by the 48.11% increase in the loan portfolio
from March 31, 2004 to March 31, 2005. Total loans at March 31, 2005 reached a
record $354.46 million. Our strong loan demand generated record increases in
interest income. Interest income on loans increased $1.79 million or 37.88% to
$6.51 million for the three months ended March 31, 2005.
Interest expense of $2.37 million for the quarter ended March 31, 2005
represented a $289.98 thousand increase from the comparable period in 2004. The
increase was primarily attributable to the record increase in the Company's
average interest bearing liabilities, which was offset by the decrease in
overall rates paid on liabilities as a result of higher priced time deposits
repricing at lower rates throughout the quarter. Average interest bearing
liabilities increased $55.72 million or 23.05% from March 31, 2004 to March 31,
2005, while the overall rates paid on these liabilities decreased 24 basis
points to 3.23%.
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. As a result of the record increases in interest income coupled with
the reduction in the yield paid on our interest bearing liabilities, our net
interest income reached an all time quarterly high of $4.26 million for the
quarter ended March 31, 2005, an increase of $1.44 million or 50.99% over the
comparable period in 2004.
Net interest margin, which is calculated by expressing net interest income
as a percentage of average interest earning assets, is an indicator of
effectiveness in generating income from earning assets. The Company's net
interest margin (tax equivalent basis) increased 70 basis points from 4.11%
during the first three months of 2004 to 4.81% for the same period in 2005.
Commonwealth Bankshares exceeded its goal for asset growth. Total assets at
March 31, 2005 reached a new high of $394.52 million, up 37.08% or $106.72
million from $287.80 million at March 31, 2004.
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.
CONTACT: Edward J. Woodard, Jr., CLBB, Chairman of the Board, President
and Chief Executive Officer, P.O. Box 1177, Norfolk, Virginia 23501, Phone:
(757) 446-6904 or ewoodard@bocmail.net
Web Site: http://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.
Selected Financial Information (Unaudited)
Three Months Ended
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(in thousands, except per share data) March 31, 2005 March 31, 2004
-------------- --------------
Operating Results:
Interest Income $ 6,634 $ 4,904
Interest Expense 2,370 2,080
Net interest income 4,264 2,824
Provision for loan losses 330 465
Noninterest income 747 625
Noninterest expense 2,840 2,180
Income before provision for income
taxes 1,841 804
Provision for income taxes 624 259
Net income $ 1,217 $ 545
Per Share Data:
Basic earnings $ 0.40 $ 0.28
Diluted earnings $ 0.35 $ 0.22
Book value $ 12.68 $ 10.27
Dividends per share $ 0.05 $ 0.05
Basic weighted average shares
outstanding 3,029,818 1,920,291
Diluted weighted average shares
outstanding 3,696,600 2,831,149
Shares outstanding at period-end 3,049,980 1,945,115
At Period End
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March 31, 2005 March 31, 2004
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Month End Balance:
Assets $ 394,515 $ 287,797
Loans* 354,459 239,328
Loans held for sale 14,349 22,248
Investment securities 6,770 8,350
Deposits 289,758 257,307
Shareholders' equity 38,670 19,969
YTD Average Balance:
Assets $ 374,185 $ 296,777
Loans* 341,939 231,434
Loans held for sale 7,835 23,073
Investment securities 6,896 11,467
Deposits 281,613 263,016
Shareholders' equity 37,565 19,546
Ratios:
Return on average assets 1.32% 0.74%
Return on average shareholders' equity 13.14% 11.21%
Shareholders' equity to total assets 9.80% 6.94%
Loan loss allowance to loans* 0.88% 1.24%
Loan loss allowance to non-performing
assets 633.62% 111.44%
Non-performing assets to total assets 0.12% 0.93%
Net interest margin (tax equivalent
basis) 4.81% 4.11%
Bank's Tier 1 capital to average assets 11.11% 8.02%
Bank's Tier 1 capital to
risk weighted assets 12.24% 9.98%
Bank's Total capital to
risk weighted assets 13.16% 11.27%
* Net of unearned income and loans held for sale
SOURCE Commonwealth Bankshares, Inc.
-0- 05/04/2005
/CONTACT: Edward 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 /