Commonwealth Directed to Return to Adequate Levels of Capital
July 07 2011 - 11:37AM
Commonwealth Bankshares, Inc. (Nasdaq:CWBS) announced today that it
is expediting efforts to increase Bank of the Commonwealth's (the
"Bank") equity position just as the Board of Governors of the
Federal Reserve System (the "Board of Governors") and the Bank
executed a Prompt Corrective Action Directive (the "Directive"),
effective July 1, 2011, requiring the Bank return to adequate
levels of capital in 30 days, or such additional time as the Board
of Governors may permit.
The Directive also imposes restrictions on capital
distributions, deposit rate restrictions, and restrictions on asset
growth and branching. Management and the Board are fully committed
to restoring the Bank's capital levels and return the Bank to
profitability.
Commonwealth has diligently been working with FIG Partners LLC
of Atlanta, Ga. and McKinnon & Company, Inc. of Norfolk, Va. to
explore strategic options that would return Commonwealth to
acceptable levels of capital as required by the Federal
Reserve. In addition, Commonwealth has hired the legal firm
DLA Piper, LLP of Washington, D.C., the accounting firm KPMG, LLP
of Norfolk, Va., RP Financial, LC of Arlington, Va., Clayton
Commercial Services of Shelton, Conn., and Longitude Capital
Advisors, LLC of Elmhurst, Ill.
"These firms are preeminent companies that are essential to our
efforts of identifying strategic opportunities to strengthen our
capital position, improve our financial performance and shareholder
value," said Commonwealth Bankshares President and CEO Chris
Beisel. "Both the investment banking firms and the related
assisting companies actually began working with our team earlier
this year. We are pleased with their progress to date and are
hopeful for their planned success, realizing, however, that we
still have a distance to go in overcoming our challenges."
Commonwealth's capital ratios fell below regulatory minimums
after the bank took steps to reclassify all of its loans, moving a
significant number of earning assets to a non-accruing status. Many
loans were also downgraded after re-adjusting their values based on
new appraisals and evaluations.
"Our portfolios are basically now clean, especially for the
larger credits," Beisel said. "We have made a lot of progress in
the past year of working through our problem
credits. Unfortunately, our capital levels have suffered as a
result. Yet, this point was the point we needed to get to in order
to fully identify and quantify our problems followed by setting a
corrective course which has been accomplished."
Commonwealth Bankshares, Inc., through its banking subsidiary
the Bank of Commonwealth, operates 21 offices in Hampton Roads, Va.
and northeastern North Carolina. Commonwealth has approximately
$1.0 billion in assets.
The securities offered will not be and have not been registered
under the Act and may not be offered or sold in the United States
absent registration or an applicable exemption from registration
requirements.
CONTACT: Chris Beisel
CEO and President
Commonwealth Bankshares, Inc.
(757) 446-6953
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