Exhibit 99.1
COMMONWEALTH BANKSHARES, INC., NORFOLK, VA, ANNOUNCES 52% INCREASE
IN EARNINGS FOR THE YEAR ENDED DECEMBER 31, 2006
NORFOLK, Va., Jan. 25 /PRNewswire-FirstCall/ --
2006 GROWTH RATES
(in thousands)
Increase Over
Year Ended Year Ended Year Ended
December 31, December 31, December 31, Growth
2006 2005 2005 Rate
-------------- -------------- -------------- --------------
Assets 715,205 549,454 165,751 30.2%
Loans 669,541 508,903 160,638 31.6%
Deposits 487,175 383,890 103,285 26.9%
Net Income 10,092 6,634 3,458 52.1%
Commonwealth Bankshares, Inc. (Nasdaq: CWBS) today reported record earnings
of $10.1 million for the year ended December 31, 2006, an increase of $3.5
million or 52.1% over the comparable period in 2005. For the quarter ended
December 31, 2006, the Company earned a record $2.8 million, an increase of
40.5% over the $2.0 million reported in the fourth quarter of 2005. On a per
share basis, diluted earnings increased 25.0% to $1.70 for the year ended
December 31, 2006 compared to $1.36 for the same period in 2005. For the quarter
ended December 31, 2006, diluted earnings per share was $0.42 up from $0.36 for
the fourth quarter in 2005. 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 and the
eleven-for-ten stock split distributed on December 29, 2006 to shareholders of
record on December 18, 2006.
Edward J. Woodard, Jr., CLBB, Chairman of the Board, President and Chief
Executive Officer, commented, "Throughout my forty-six year banking career, I
have never been more proud and excited to be part of such a dynamic and growing
company as Bank of the Commonwealth. 2006 was an exceptional year for us, both
in earnings and asset growth. Our fourth quarter earnings surpassed any
previously reported quarterly earnings over our thirty-five year history.
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. In
February 2007, we are scheduled to move into our permanent branch in the Ocean
View section of Norfolk, Virginia and we will open our second branch in
Portsmouth, Virginia at 1020 London Boulevard. In April 2007, we will be opening
our third branch in Chesapeake, Virginia at 2600 Taylor Road, across from the
Chesapeake Square Mall, as well as our first branch in North Carolina on
Caratoke Highway in Powells Point. In May 2007, we will be opening our second
branch in North Carolina in the St. Waves Plaza in St. Waves, NC. We are also
pursuing branch locations in the Redmill section of Virginia Beach, Cypress
Point in Norfolk, Moyock, NC and in the Greenbrier area of Chesapeake. 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 opened in May 2006 in Kill Devil Hills, NC at 2603 N. Croatan
Highway. Our expansion strategy, combined with sound asset quality, expanding
margins and improved operating efficiencies, continues to drive our results. I
am also proud to report that on October 26, 2006, the Company successfully added
$27.5 million in additional capital through a private placement of 1,163,461
shares of newly issued Company common stock. 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 a strategy we believe will
enhance the long-term growth of the company and value for our shareholders."
The Company's record earnings resulted in favorable profitability ratios.
Profitability as measured by the Company's return on average assets (ROA) was
1.57% for the year ended December 31, 2006 up 11 basis points or 7.5% from 1.46%
for the comparable period in 2005. Return on average equity (ROE) increased 37
basis points to 13.72% for the year ended December 31, 2006 as compared to
13.35% for the year ended December 31, 2005. For the quarter ended December 31,
2006, ROA was 1.58% and ROE was 11.73%. In addition, the Company's efficiency
ratio (tax equivalent basis) improved to 48.16% for the year ended December 31,
2006 from 49.57% a year ago.
The record earnings were driven by the $160.6 million or 31.6% increase in
the Bank's loan portfolio from December 31, 2005 to December 31, 2006. Total
loans at December 31, 2006 reached a record $669.5 million. Our strong loan
demand generated record increases in interest income. Interest income on loans
increased $18.2 million or 54.0% to $52.0 million for the year ended December
31, 2006. For the quarter ended December 31, 2006 interest income on loans
increased 39.0% to $14.4 million up from the $10.3 million reported in the
fourth quarter of 2005.
Interest expense of $22.8 million for the year ended December 31, 2006
represented a $10.1 million increase from the comparable period in 2005. For the
fourth quarter of 2006, interest expense was $6.4 million, an increase of $2.2
million over the fourth 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
higher 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 earning assets
coupled with the increase in the rate earned on our interest earning assets, our
net interest income reached an all time quarterly high of $8.2 million for the
quarter ended December 31, 2006, an increase of $1.9 million or 29.9% over the
comparable period in 2005. For the year ended December 31, 2006, net interest
income reached a record $30.1 million, an increase of $8.6 million or 40.0% 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) was 4.86% for the year ended December 31,
2006 compared to 4.90% for the same period in 2005. For the quarter ended
December 31, 2006 the net interest margin (tax equivalent basis) was 4.87% as
compared to 4.94% reported in the fourth quarter of 2005.
Commonwealth Bankshares exceeded its goal for asset growth. Total assets at
December 31, 2006 reached a new high of $715.2 million, up 30.2% or $165.8
million from $549.5 million at December 31, 2005.
Despite the rapid growth in the Company's loan portfolio, our asset quality
remains exceptional. Net charge-offs for the year ended December 31, 2006 were
$68.8 thousand, or 0.011% of year to date average loans. Non- performing assets
were $2.2 million or 0.31% of total assets at December 31, 2006 compared to
$182.5 thousand or 0.03% of total assets at December 31, 2005.
Shareholders' equity at December 31, 2006 reached a new high of $103.2
million up $40.5 million or 64.6% from $62.7 million at December 31, 2005. The
record increase in net income contributed to the new high along with the $27.5
million in additional capital raised in the fourth quarter of 2006 though 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 2007 first quarter dividend by 20.7% to
$0.06 per share, 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 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 Twelve Months Ended
----------------------------- -----------------------------
(in thousands, except per December 31, December 31, December 31, December 31,
share data) 2006 2005 2006 2005
- ----------------------------------- ------------ ------------ ------------ ------------
Operating Results:
Interest income $ 14,606 $ 10,480 $ 52,916 $ 34,289
Interest expense 6,358 4,128 22,797 12,742
Net interest income 8,248 6,352 30,119 21,547
Provision for loan losses 645 900 2,690 2,740
Non-interest income 1,283 1,097 5,059 3,893
Non-interest expense 4,509 3,552 16,967 12,638
Income before provision for
income taxes 4,377 2,997 15,521 10,062
Provision for income taxes 1,606 1,018 5,405 3,419
Income after provision for
income taxes 2,771 1,979 10,116 6,643
Noncontrolling interest (4) (9) (24) (9)
Net income $ 2,767 $ 1,970 $ 10,092 $ 6,634
Per Share Data**:
Basic earnings $ 0.43 $ 0.40 $ 1.86 $ 1.54
Diluted earnings $ 0.42 $ 0.36 $ 1.70 $ 1.36
Book value $ 15.08 $ 12.73 $ 15.08 $ 12.73
Dividends per share $ 0.05 $ 0.0495 $ 0.1991 $ 0.1736
Basic weighted average
shares outstanding 6,363,628 4,915,767 5,440,303 4,310,914
Diluted weighted average
shares outstanding 6,656,071 5,712,963 5,999,436 5,055,552
Shares outstanding at
period-end 6,844,975 4,928,992 6,844,975 4,928,992
Period End Balances:
Assets $ 715,205 $ 549,454 $ 715,205 $ 549,454
Loans* 669,541 508,903 669,541 508,903
Investment securities 7,676 8,924 7,676 8,924
Deposits 487,175 383,890 487,175 383,890
Shareholders' equity 103,225 62,730 103,225 62,730
Average Balances:
Assets $ 696,887 $ 528,055 $ 643,042 $ 455,833
Loans* 655,102 497,960 603,133 417,106
Loans held for sale - 417 - 11,747
Investment securities 7,907 5,177 8,525 6,026
Deposits 499,378 366,985 451,561 329,955
Shareholders' equity 93,572 61,434 73,546 49,702
Financial Ratios:
Return on average assets 1.58% 1.48% 1.57% 1.46%
Return on average
shareholders' equity 11.73% 12.72% 13.72% 13.35%
Efficiency Ratio (tax
equivalent basis) 47.24% 47.62% 48.16% 49.57%
Shareholders' equity to
total assets 14.43% 11.42% 14.43% 11.42%
Loan loss allowance to
loans* 1.22% 1.09% 1.22% 1.09%
Loan loss allowance to non-
performing assets 365.68% 3025.54% 365.68% 3025.54%
Non-performing assets to
total assets 0.31% 0.03% 0.31% 0.03%
Net interest margin (tax
equivalent basis) 4.87% 4.94% 4.86% 4.90%
* Net of unearned income
** 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 and the
eleven-for-ten stock split distributed on December 29, 2006.
SOURCE Commonwealth Bankshares, Inc.
-0- 01/25/2007
/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 /