Exhibit 99.1
COMMONWEALTH BANKSHARES, INC., NORFOLK, VA, ANNOUNCES RECORD EARNINGS
FOR THE QUARTER ENDED MARCH 31, 2006
NORFOLK, Va., April 24 /PRNewswire-FirstCall/ -- Commonwealth Bankshares,
Inc. (Nasdaq: CWBS) today reported record earnings of $2.05 million, for the
quarter ended March 31, 2006, an increase of 68.06% over the $1.22 million
reported in the first quarter of 2005. On a per share basis, diluted earnings
increased 25.71% to $0.44 for the quarter ended March 31, 2006 compared to $0.35
for the same period in 2005.
Edward J. Woodard, Jr., CLBB, Chairman of the Board, President and Chief
Executive Officer, commented, "Our tremendous growth rate continues unabated
into the first quarter of 2006. We are pleased to report another record quarter
in both earnings and asset growth. Our first quarter earnings surpassed any
previously reported quarterly earnings. Equally meaningful, our exceptional
growth rate has been achieved while, at the same time, improving profitability,
maintaining our sound asset quality, and building our capital base. We continue
to seek opportunities to grow and expand our network. During the second quarter
of 2006, we are planning to open a private banking center in Norfolk.
Additionally, we plan to open additional branches over the next twelve months.
As we continue to grow we are continuously looking to expand our traditional
nonbanking services as well as searching for new avenues of revenue. Our
mortgage subsidiary, Bank of the Commonwealth Mortgage, has expanded its
mortgage lending services to the outer banks of North Carolina. Next month we
plan to open our fourth mortgage office in Kill Devil Hills, NC at 2603 N.
Croatan Highway. As we look to the remainder of the year, we believe we are
positioned for continued strong performance and growth. Our expansion strategy,
combined with sound asset quality, expanding margins and improved operating
efficiencies, continues to drive our results. 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
1.45% for the quarter ended March 31, 2006 up 13 basis points from 1.32% for the
first quarter of 2005. Return on average equity (ROE) was 13.00% for the quarter
ended March 31, 2006, as compared to 13.14% for the quarter ended March 31,
2005. Average assets increased $198.15 million or 52.95% from the quarter ended
March 31, 2005 to March 31, 2006. Average equity increased $26.24 million or
69.85% as of March 31, 2006 as compared to the comparable period in 2005, as a
result of the additional capital raised in the second quarter of 2005. In
addition, the Company's efficiency ratio (tax equivalent basis) was 51.00% for
the three months ended March 31, 2006 compared to 56.51% during the comparable
period in 2005.
The record earnings were driven by a 58.56% increase in the loan portfolio
from March 31, 2005 to March 31, 2006. Total loans at March 31, 2006 reached a
record $562.02 million. Our strong loan demand generated record increases in
interest income. Interest income on loans increased $4.58 million or 70.32% to
$11.08 million for the three months ended March 31, 2006.
Interest expense of $4.66 million for the quarter ended March 31, 2006
represented a $2.29 million increase from the comparable period in 2005. The
increase was primarily attributable to the record increase in the Company's
average interest bearing liabilities, along with the increase in overall rates
paid on liabilities as a result of the rising interest rate environment. Average
interest bearing liabilities increased $162.52 million or 54.64% from March 31,
2005 to March 31, 2006, while the overall rates paid on these liabilities
increased 88 basis points to 4.11%.
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, our net
interest income reached an all time quarterly high of $6.64 million for the
quarter ended March 31, 2006, an increase of $2.37 million or 55.60% over the
comparable period in 2005.
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 from 4.81% during the first
three months of 2005 to 4.88% for the same period in 2006.
Commonwealth Bankshares exceeded its goal for asset growth during the first
quarter of 2006. Total assets at March 31, 2006 reached a new high of $603.07
million, up 52.86% or $208.55 million from $394.52 million at March 31, 2005.
Despite the rapid growth in the Company's loan portfolio, our asset quality
remains exceptional. Net charge-offs for the quarter ended March 31, 2006 were
$40.68 thousand, or 0.008% of year to date average loans. Non- performing assets
were $473.73 thousand or 0.08% of total assets at March 31, 2006 compared to
$492.66 thousand or 0.12% of total assets at March 31, 2005.
Shareholders' equity at March 31, 2006 reached a new high of $65.45 million
up $26.78 million or 69.26% from $38.67 million at March 31, 2005. The record
increase in net income contributed to the new high along with the $19.34 million
in additional capital raised in the second quarter of 2005 through a private
placement of its common stock. Mr. Woodard added, "Our shareholders play an
important role in supporting our company. To share in the Company's success, I
am pleased to note that we raised our quarterly cash dividend 20% to $0.06 per
share paid in the first two quarters of 2006, from $0.05 per share paid in the
same time period of 2005, reflecting the Company's strong financial
performance."
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 ten 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 its subsidiary
Executive Title Center, mortgage funding services through its subsidiary, Bank
of the Commonwealth Mortgage, and investment related services through its new
subsidiary Commonwealth Financial Advisors, LLC.* 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
*Securities and Insurance Products are: *not insured by FDIC or any Federal
Government Agency * May Lose Value * Not a Deposit of or Guaranteed by the Bank
or any Bank Affiliate. Securities and insurance offered through BI Investments,
LLC. member NASD and SIPC. BI Investments is associated with Bank of the
Commonwealth. Commonwealth Financial Advisors, LLC is a wholly-owned subsidiary
of Bank of the Commonwealth. 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
--------------------------------
March 31, March 31,
(in thousands, except per share data) 2006 2005
- -------------------------------------------------- -------------- --------------
Operating Results:
Interest income $ 11,296 $ 6,634
Interest expense 4,661 2,370
Net interest income 6,635 4,264
Provision for loan losses 670 330
Noninterest income 1,084 747
Noninterest expense 3,943 2,840
Income before provision for income
taxes and noncontrolling interest 3,106 1,841
Provision for income taxes 1,055 624
Income before noncontrolling interest 2,051 1,217
Noncontrolling interest in subsidiary (5) -
Net income $ 2,046 $ 1,217
Per Share Data:
Basic earnings $ 0.49 $ 0.40
Diluted earnings $ 0.44 $ 0.35
Book value $ 15.72 $ 12.68
Dividends $ 0.06 $ 0.05
Basic weighted average shares
outstanding 4,152,466 3,029,818
Diluted weighted average shares
outstanding 4,769,070 3,696,600
Shares outstanding at period-end 4,164,379 3,049,980
Period End Balances:
Assets $ 603,065 $ 394,515
Loans* 562,016 354,459
Loans held for sale - 14,349
Investment securities 8,823 6,770
Deposits 424,391 289,758
Shareholders' equity 65,452 38,670
Average Balances:
Assets $ 572,332 $ 374,185
Loans* 535,398 341,939
Loans held for sale - 7,835
Investment securities 8,891 6,896
Deposits 390,219 281,613
Shareholders' equity 63,804 37,565
Financial Ratios:
Return on average assets 1.45% 1.32%
Return on average shareholders' equity 13.00% 13.14%
Efficiency Ratio (tax equivalent basis) 51.00% 56.51%
Shareholders' equity to total assets 10.85% 9.80%
Loan loss allowance to loans* 1.09% 0.88%
Loan loss allowance to non-
performing assets 1298.70% 633.62%
Non-performing assets to total assets 0.08% 0.12%
Net interest margin (tax equivalent basis) 4.88% 4.81%
Bank's Tier 1 capital to average assets 15.12% 11.11%
Bank's Tier 1 capital to risk
weighted assets 15.63% 12.24%
Bank's Total capital to risk
weighted assets 16.74% 13.16%
* Net of unearned income and loans held for sale
SOURCE Commonwealth Bankshares, Inc.
-0- 04/24/2006
/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/