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[10 bagger]

CWBS...Small Bank update.. In the contest..hank

On June 27, 2005, the Company successfully added $19.34 million in additional capital through a private placement of 967,009 shares of newly issued Company common stock @$20.00... (This is restricted stock sold without discount)

Press Release Source: Commonwealth Bankshares, Inc.

Commonwealth Bankshares, Inc., Norfolk, VA, Announces Record Earnings for the Quarter and Six Months Ended June 30, 2005
Tuesday July 19, 1:09 pm ET

NORFOLK, Va., July 19 /PRNewswire-FirstCall/ -- Commonwealth Bankshares, Inc. (Nasdaq: CWBS - News) today reported record earnings of $2.7 million for the first six months of 2005, an increase of $1.4 million or 109.0% over the comparable period in 2004. For the quarter ended June 30, 2005, the Company earned a record $1.5 million, an increase of 98.4% over the $744.7 thousand reported in the second quarter of 2004. On a per share basis, diluted earnings increased 43.4% to $0.76 for the six months ended June 30, 2005 compared to $0.53 for the same period in 2004. For the quarter ended June 30, 2005, diluted earnings per share was $0.41, up from $0.30 for the second quarter in 2004.
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Edward J. Woodard, Jr., CLBB, Chairman of the Board, President and Chief Executive Officer, commented, "Throughout my 44 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. The second quarter of 2005 was another record quarter for us, both in earnings and asset growth. Our second quarter earnings surpassed any previously reported quarterly earnings over our thirty- four year history. We continue to seek opportunities to grow and expand our franchise. During the first half of 2005 there were several exciting events which transformed our Bank. We added four of the area's leading veteran commercial lending officers, with over sixty-eight years of combined experience, to our professional team at Bank of the Commonwealth. With the addition of these professionals, we are poised to grow our commercial lending operations significantly. Plans were finalized to open three new branches within the next four months. A new branch in the Ocean View section of Norfolk is scheduled to open by the end of July, a new branch in the Western Branch section of the Tri-Cities area of Portsmouth - Chesapeake - Northern Suffolk is scheduled to open the first of August and a new branch in the Little Neck - Birchwood corridor on Virginia Beach Boulevard in Virginia Beach is scheduled to open in October 2005. As a result of this growth, a number of seasoned community banking professionals have joined the Bank of the Commonwealth's staff over the past six months, adding to the experience and community related involvements the Bank has enjoyed for some thirty-four years as the oldest community bank headquartered in and serving Southside Hampton Roads. 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 commenced operations July 1st. In addition to providing a considerably diverse and expanded source of fee income, Executive Title Center will provide a high level of responsive and personalized service to our customers, making their real estate endeavors a smooth transaction. I am also proud to report that on June 27, 2005, the Company successfully added $19.34 million in additional capital through a private placement of 967,009 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 on 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 1.36% for the six months ended June 30, 2005 up 51 basis points from 0.85% for the first six months of 2004. Return on average equity (ROE) increased 100 basis points to 14.01% for the six months ended June 30, 2005 as compared to 13.01% for the six months ended June 30, 2004. For the quarter ended June 30, 2005, ROA was 1.40% and ROE was 14.82%.

The record earnings were driven by the $151.4 million or 57.4% increase in the Bank's loan portfolio from June 30, 2004 to June 30, 2005. Total loans at June 30, 2005 reached a record $415.1 million. Our strong loan demand generated record increases in interest income. Interest income on loans increased $4.4 million or 44.8% to $14.1 million for the six months ended June 30, 2005. For the quarter ended June 30, 2005 interest income on loans increased 51.4% to $7.6 million up from the $5.0 million reported in the second quarter in 2004.

Interest expense of $5.2 million for the six months ended June 30, 2005 represented a $1.0 million increase from the comparable period in 2004. For the second quarter of 2005, interest expense was $2.8 million, an increase of $749.5 thousand over the second quarter of 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 first half of the year.

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 $4.9 million for the quarter ended June 30, 2005, an increase of $1.9 million or 60.8% over the comparable period in 2004. For the six months ended June 30, 2005, net interest income reached a record $9.2 million, an increase of $3.3 million 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 six months of 2004 to 4.80% for the same period in 2005.

Commonwealth Bankshares exceeded its goal for asset growth. Total assets at June 30, 2005 reached a new high of $475.4 million, up 46.2% or $150.2 million from $325.2 million at June 30, 2004.

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, 2005 were $48.1 thousand, or 0.01% of year to date average loans. Non- performing assets were $442.0 thousand or 0.09% of total assets at June 30, 2005 compared to $1.9 million or 0.58% of total assets at June 30, 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 eight bank branches strategically located throughout the Hampton Roads region with three new offices scheduled to open by October 2005 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 and mortgage funding services through its subsidiary 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.

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)

(in thousands, except per
share data) Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
Operating Results:
Interest Income $7,746 $5,142 $14,381 $10,046
Interest Expense 2,840 2,091 5,210 4,171
Net interest income 4,906 3,051 9,171 5,875
Provision for loan losses 685 370 1,015 835
Non-interest income 941 674 1,687 1,299
Non-interest expense 2,922 2,236 5,762 4,417
Income before provision for
income taxes 2,240 1,119 4,081 1,922
Provision for income taxes 762 374 1,386 633
Net income $1,478 $745 $2,695 $1,289

Per Share Data:
Basic earnings $0.48 $0.38 $0.88 $0.66
Diluted earnings $0.41 $0.30 $0.76 $0.53
Book value $14.56 $10.43 $14.56 $10.43
Basic weighted average
shares outstanding 3,100,300 1,965,186 3,062,019 1,942,739
Diluted weighted average
shares outstanding 3,754,952 2,718,009 3,722,486 2,720,157
Shares outstanding at
period-end 4,036,189 1,982,361 4,036,189 1,982,361

Period End Balances:
Assets $475,439 $325,250 $475,439 $325,250
Loans* 415,086 263,691 415,086 263,691
Loans held for sale 32,004 33,806 32,004 33,806
Investment securities 5,696 10,104 5,696 10,104
Deposits 353,581 256,033 353,581 256,033
Shareholders' equity 58,752 20,676 58,752 20,676

Average Balance:
Assets $424,799 $313,800 $399,633 $305,036
Loans* 384,924 264,547 363,551 241,044
Loans held for sale 13,901 25,994 10,885 31,177
Investment securities 6,715 7,358 6,805 9,939
Deposits 315,460 258,296 298,630 260,609
Shareholders' equity 39,995 20,322 38,787 19,934

Financial Ratios:
Return on average assets 1.40% 0.95% 1.36% 0.85%
Return on average
shareholders' equity 14.82% 14.74% 14.01% 13.01%
Shareholders' equity to
total assets 12.36% 6.36% 12.36% 6.36%
Loan loss allowance to loans 0.92% 1.27% 0.92% 1.27%
Loan loss allowance to non-
performing assets 861.21% 177.68% 861.21% 177.68%
Non-performing assets to
total assets 0.09% 0.58% 0.09% 0.58%
Net interest margin (tax
equivalent basis) 4.80% 4.10% 4.80% 4.11%
Bank's Tier 1 capital to
average assets 14.53% 7.86% 14.53% 7.86%
Bank's Tier 1 capital to
risk weighted assets 15.28% 9.29% 15.28% 9.29%
Bank's Total capital to risk
weighted assets 16.22% 10.54% 16.22% 10.54%

* Net of unearned income and loans held for sale




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Source: Commonwealth Bankshares, Inc.