Exhibit 99.1
COMMONWEALTH BANKSHARES, INC., NORFOLK, VA, ANNOUNCES RECORD
EARNINGS FOR THE QUARTER AND SIX MONTHS ENDED JUNE 30, 2006
AND DECLARES QUARTERLY CASH DIVIDEND
NORFOLK, Va., July 25 /PRNewswire-FirstCall/ -- Commonwealth Bankshares,
Inc. (Nasdaq: CWBS) today reported record earnings of $4.6 million for the first
six months of 2006, an increase of $1.9 million or 69.2% over the comparable
period in 2005. For the quarter ended June 30, 2006, the Company earned a record
$2.5 million, an increase of 70.2% over the $1.5 million reported in the second
quarter of 2005. On a per share basis, diluted earnings increased 29.0% to $0.89
for the six months ended June 30, 2006 compared to $0.69 for the same period in
2005. For the quarter ended June 30, 2006, diluted earnings per share was $0.49,
up from $0.37 for the second quarter in 2005.
In consideration of the Company's strong financial performance and proven
track record, the Directors of Commonwealth Bankshares, Inc. declared a
quarterly cash dividend in the amount of 5.5 cents per share on its common
stock, payable August 31, 2006, to shareholders of record as of August 21, 2006.
This is the third quarterly dividend declared in 2006, for a total year to date
dividend of 16.4 cents per share, up 20% from the 13.7 cents per share dividend
declared during the first three quarters of 2005. Total dividends paid in 2005
and 2004 were 19.1 cents and 18.2 cents per share, respectively. All share and
per share amounts have been restated for all periods presented to reflect the
eleven-for-ten stock split distributed on June 30, 2006 to shareholders of
record on June 19, 2006.
Edward J. Woodard, Jr., CLBB, Chairman of the Board, President and Chief
Executive Officer, commented, "Our tremendous growth rate continues unabated
into the first half of 2006. We are pleased to report another record quarter in
both earnings and asset growth. Our second 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. In June 2006, we opened a
private banking center in Norfolk. Furthermore, 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. Our fourth mortgage office in Kill Devil Hills, NC at 2603 N. Croatan
Highway opened in May 2006. 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
1.53% for the six months ended June 30, 2006 up 17 basis points from 1.36% for
the first six months of 2005. Return on average equity (ROE) increased 10 basis
points to 14.11% for the six months ended June 30, 2006 as compared to 14.01%
for the six months ended June 30, 2005. For the quarter ended June 30, 2006, ROA
was 1.60% and ROE was 15.15%. Year to date average assets increased $202.6
million or 50.7% from June 30, 2005 to June 30, 2006. Year to date average
equity increased $26.4 million or 68.1% as of June 30, 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 49.37% and 47.92% for the six months and three months
ended June 30, 2006 compared to 52.92% and 49.84%, respectively, during the
comparable period in 2005.
The record earnings were driven by the $197.5 million or 47.6% increase in
the Bank's loan portfolio from June 30, 2005 to June 30, 2006. Total loans at
June 30, 2006 reached a record $612.6 million. Our strong loan demand generated
record increases in interest income. Interest income on loans increased $9.7
million or 68.9% to $23.8 million for the six months ended June 30, 2006. For
the quarter ended June 30, 2006 interest income on loans increased 67.6% to
$12.8 million up from the $7.6 million reported in the second quarter of 2005.
Interest expense of $10.2 million for the six months ended June 30, 2006
represented a $4.9 million increase from the comparable period in 2005. For the
second quarter of 2006, interest expense was $5.5 million, an increase of $2.7
million over the second quarter of 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.
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 $7.5 million for the
quarter ended June 30, 2006, an increase of $2.6 million or 52.7% over the
comparable period in 2005. For the six months ended June 30, 2006, net interest
income reached a record $14.1 million, an increase of $5.0 million 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 11 basis points from 4.80%
during the first six months of 2005 to 4.91% for the same period in 2006. For
the quarter ended June 30, 2006, the net interest margin was 4.94% compared to
4.80% for the comparable period in 2005.
Commonwealth Bankshares exceeded its goal for asset growth. Total assets at
June 30, 2006 reached a new high of $658.6 million, up 38.5% or $183.1 million
from $475.4 million at June 30, 2005.
Despite the rapid growth in the Company's loan portfolio, our asset quality
remains exceptional. Net charge-offs for the six months ended June 30, 2006 were
$61.3 thousand, or 0.01% of year to date average loans. Non- performing assets
were $255.6 thousand or 0.04% of total assets at June 30, 2006 compared to
$442.0 thousand or 0.09% of total assets at June 30, 2005.
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 eleven 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 Six Months Ended
--------------------------- ---------------------------
(in thousands, except June 30, June 30, June 30, June 30,
per share data) 2006 2005 2006 2005
- ----------------------------------- ------------ ------------ ------------ ------------
Operating Results:
Interest Income $ 12,991 $ 7,746 $ 24,287 $ 14,381
Interest Expense 5,498 2,840 10,158 5,210
Net interest income 7,493 4,906 14,129 9,171
Provision for loan losses 750 685 1,420 1,015
Noninterest income 1,267 941 2,351 1,687
Noninterest expense 4,191 2,922 8,134 5,762
Income before provision for
income taxes and
noncontrolling interest 3,819 2,240 6,926 4,081
Provision for income taxes 1,296 762 2,352 1,386
Income before noncontrolling
interest 2,523 1,478 4,574 2,695
Noncontrolling interest in
subsidiary 8 - 14 -
Net income $ 2,515 $ 1,478 $ 4,560 $ 2,695
Per Share Data**:
Basic earnings $ 0.54 $ 0.43 $ 0.99 $ 0.80
Diluted earnings $ 0.49 $ 0.37 $ 0.89 $ 0.69
Book value $ 14.66 $ 13.23 $ 14.66 $ 13.23
Dividends $ 0.055 $ 0.045 $ 0.109 $ 0.091
Basic weighted average
shares outstanding 4,637,621 3,410,330 4,602,860 3,368,221
Diluted weighted average
shares outstanding 5,266,764 4,130,471 5,250,648 4,094,732
Shares outstanding at
period-end 4,662,820 4,439,808 4,662,820 4,439,808
Period End Balances:
Assets $ 658,554 $ 475,439 $ 658,554 $ 475,439
Loans* 612,607 415,086 612,607 415,086
Loans held for sale - 32,004 - 32,004
Investment securities 8,558 5,696 8,558 5,696
Deposits 474,770 353,581 474,770 353,581
Shareholders' equity 68,376 58,752 68,376 58,752
Average Balance:
Assets $ 631,738 $ 424,799 $ 602,211 $ 399,633
Loans* 591,281 384,924 563,494 363,551
Loans held for sale - 13,901 - 10,885
Investment securities 8,787 6,715 8,838 6,805
Deposits 445,726 315,460 418,126 298,630
Shareholders' equity 66,557 39,995 65,188 38,787
Financial Ratios:
Return on average assets 1.60% 1.40% 1.53% 1.36%
Return on average
shareholders' equity 15.15% 14.82% 14.11% 14.01%
Efficiency ratio (tax
equivalent basis) 47.92% 49.84% 49.37% 52.92%
Shareholders' equity to total
assets 10.38% 12.36% 10.38% 12.36%
Loan loss allowance to loans 1.12% 0.92% 1.12% 0.92%
Loan loss allowance to
non-performing assets 2692.00% 861.21% 2692.00% 861.21%
Non-performing assets to
total assets 0.04% 0.09% 0.04% 0.09%
Net interest margin (tax
equivalent basis) 4.94% 4.80% 4.91% 4.80%
Bank's Tier 1 capital to
average assets 14.15% 14.53% 14.15% 14.53%
Bank's Tier 1 capital to risk
weighted assets 14.77% 15.28% 14.77% 15.28%
Bank's Total capital to risk
weighted assets 15.91% 16.22% 15.91% 16.22%
* Net of unearned income and loans held for sale
** All share and per share amounts have been restated for all periods
presented to reflect the eleven-for-ten stock split distributed on June 30,
2006
SOURCE Commonwealth Bankshares, Inc.
-0- 07/25/2006
/CONTACT: Edward J. Woodard, Jr., CLBB, Chairman of the Board, President
and Chief Executive Officer of Commonwealth Bankshares, Inc., +1-757-446-6904,
ewoodard@bocmail.net/
/Web site: http://www.bankofthecommonwealth.com/
(CWBS)