Exhibit 99.1
COMMONWEALTH BANKSHARES, INC., NORFOLK, VA, ANNOUNCES EARNINGS FOR THE QUARTER
ENDED MARCH 31, 2007
NORFOLK, Va., April 18 /PRNewswire-FirstCall/ -- Commonwealth Bankshares,
Inc. (Nasdaq: CWBS) today reported earnings of $2.8 million for the quarter
ended March 31, 2007, an increase of 35.0% over the $2.1 million reported in the
first quarter of 2006. On a per share basis, diluted earnings increased 11.1% to
$0.40 for the quarter ended March 31, 2007 compared to $0.36 for the same period
in 2006. 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, "Our tremendous growth rate continues unabated
into the first quarter of 2007. We are pleased to report another outstanding
quarter in both earnings and asset growth. 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. In February
2007, we moved to our permanent branch in the Ocean View section of Norfolk,
Virginia, as well as our second branch in Portsmouth, Virginia at 1020 London
Boulevard. In March 2007, we opened our first branch in North Carolina on
Caratoke Highway in Powells Point. In the second quarter of 2007, we have plans
to open our third and fourth branches in Chesapeake, Virginia at 2600 Taylor
Road, across from the Chesapeake Square Mall, and at 1304 Greenbrier Parkway. We
will also open our second branch in North Carolina in the St. Waves Plaza
Shopping Center in Waves, North Carolina. Prior to year end 2007, we will be
opening branches in the Cypress Point section of Virginia Beach and in Moyock,
North Carolina. We also recently finalized a lease for a branch location in the
Redmill section of Virginia Beach. As we grow, we continuously look to expand
our traditional nonbanking services and to search for new avenues of revenue.
Looking to the remainder of the year, we believe we are well 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."
The Company's first quarter earnings produced favorable profitability
ratios. Profitability as measured by the Company's return on average assets
(ROA) was 1.54% for the quarter ended March 31, 2007 up 9 basis points from
1.45% for the first quarter of 2006. Return on average equity (ROE) was 10.75%
for the quarter ended March 31, 2007, as compared to 13.00% for the quarter
ended March 31, 2006. Average assets increased $155.6 million or 27.2% from the
quarter ended March 31, 2006 to March 31, 2007. Average shareholders' equity
increased $40.4 million or 63.3% as of March 31, 2007 as compared to the same
period in 2006 as a result of the $27.5 million in capital raised in the third
quarter of 2006 through a private placement of our common stock. In addition,
the Company's efficiency ratio (tax equivalent basis) improved to 49.53% for the
three months ended March 31, 2007 compared to 51.00% during the comparable
period in 2006.
The earnings were driven by a 24.1% increase in the loan portfolio from
March 31, 2006 to March 31, 2007. Total loans at March 31, 2007 reached a record
$697.4 million. Our strong loan demand generated record increases in interest
income. Interest income on loans, including fees, increased $3.3 million or
29.3% to $14.3 million for the three months ended March 31, 2007.
Interest expense of $6.6 million for the quarter ended March 31, 2007
represented a $1.9 million increase from the comparable period in 2006. The
increase was primarily attributable to the 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 $111.7 million or 24.3% from March 31,
2006 to March 31, 2007, while the overall rates paid on these liabilities
increased 54 basis points to 4.65%.
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 its second highest quarterly total of $8.0 million for
the quarter ended March 31, 2007, an increase of $1.4 million or 21.0% over the
comparable period in 2006.
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) decreased from 4.88% during the first
three months of 2006 to 4.65% for the same period in 2007.
Commonwealth Bankshares exceeded its goal for asset growth during the first
quarter of 2007. Total assets at March 31, 2007 reached a new high of $751.3
million, up 24.6% or $148.3 million from $603.1 million at March 31, 2006.
Despite the rapid growth in the Company's loan portfolio, our asset quality
remains exceptional. Net charge-offs for the quarter ended March 31, 2007 were
$44.1 thousand, or 0.006% of year to date average loans. Non- performing assets
were $2.9 million or 0.39% of total assets at March 31, 2007 compared to $473.7
thousand or 0.08% of total assets at March 31, 2006.
Shareholders' equity at March 31, 2007 reached a new high of $106.0 million,
up $40.6 million or 62.0% from the $65.5 million at March 31, 2006. The increase
in net income contributed to the new high along with the $27.5 million in
additional capital raised in the third quarter of 2006 though a private
placement of our common stock. Mr. Woodard added, "The loyalty and continued
support of our shareholders and customers has provided the foundation for our
growth and success. We look forward continuing to execute on a strategy we
believe will enhance the long-term growth of the company and value for our
stockholders."
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 thirteen 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
subsidiary Commonwealth Financial Advisors, LLC.* Additional information about
the company, its products and services, can be found on the Web at
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.
Selected Financial Information (Unaudited)
Three Months Ended
---------------------------
March 31, March 31,
(in thousands, except per share data) 2007 2006
- ---------------------------------------- ------------ ------------
Operating Results:
Interest income $ 14,577 $ 11,296
Interest expense 6,552 4,661
Net interest income 8,025 6,635
Provision for loan losses 430 670
Noninterest income 1,196 1,084
Noninterest expense 4,573 3,943
Income before provision for income
taxes and noncontrolling interest 4,218 3,106
Provision for income taxes 1,452 1,055
Income before noncontrolling
interest 2,766 2,051
Noncontrolling interest in
subsidiary (5) (5)
Net income $ 2,761 $ 2,046
Per Share Data**:
Basic earnings $ 0.40 $ 0.41
Diluted earnings $ 0.40 $ 0.36
Book value $ 15.41 $ 12.99
Cash dividends $ 0.06 $ 0.05
Basic weighted average shares
outstanding 6,867,731 5,024,484
Diluted weighted average shares
outstanding 6,970,373 5,770,583
Shares outstanding at period-end 6,878,291 5,038,898
Period End Balances:
Assets $ 751,342 $ 603,065
Loans* 697,407 562,016
Investment securities 7,506 8,823
Deposits 510,629 424,391
Shareholders' equity 106,014 65,452
Average Balances:
Assets $ 727,905 $ 572,332
Loans* 682,383 535,398
Investment securities 7,610 8,891
Deposits 497,818 390,219
Shareholders' equity 104,162 63,804
Financial Ratios:
Return on average assets 1.54% 1.45%
Return on average shareholders'
equity 10.75% 13.00%
Efficiency Ratio (tax equivalent
basis) 49.53% 51.00%
Period end shareholders' equity to
total assets 14.11% 10.85%
Loan loss allowance to period end
loans* 1.22% 1.09%
Loan loss allowance to non-
performing assets 292.52% 1298.70%
Non-performing assets to total
assets 0.39% 0.08%
Net interest margin (tax equivalent
basis) 4.65% 4.88%
Bank's Tier 1 capital to average
assets 13.54% 15.12%
Bank's Tier 1 capital to risk
weighted assets 14.18% 15.63%
Bank's Total capital to risk
weighted assets 15.40% 16.74%
* 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- 04/18/2007
/CONTACT: Edward J. Woodard, Jr., CLBB, Chairman of the Board, President
and Chief Executive Officer, +1-757-446-6904, ewoodard@bocmail.net/
/Web site: http://www.bankofthecommonwealth.com/