Commonwealth reports second-quarter loss
- August 15, 2011
Norfolk-based Commonwealth Bankshares Inc. reported a loss for the second quarter as it looked for ways to raise more capital.
The parent company of Bank of the Commonwealth said it had a net loss of $26.2 million for the second quarter and $33 million for the for first six months of the year.
By comparison, the banking company had losses of $2.5 million and $3.5 million for the corresponding periods in 2010, respectively.
The diluted loss per share was $3.80 for the second quarter and $4.78 for the first half of the year.
Commonwealth is under pressure from the Federal Reserve to raise additional capital.
Bank officials said they have hired two investment banking firms, FIG Partners LLC of Atlanta and McKinnon & Co. Inc. of Norfolk, to find ways to improve the bank’s equity position and restore it to a well-capitalized status.
“We have completely restructured our credit risk management process,” Commonwealth Bankshares President and CEO Chris Beisel, said in a statement. “Nearly all of our efforts during the past 13 months have been on managing our problem loans and rebuilding a new credit environment. Our focus has been on little else.If our efforts to raise capital are successful, then we will have most of the credit issues behind us and we’ll be positioned for the future.”
During the first six months of 2011, the bank charged off $47.4 million in loans primarily as a result of declining collateral values. As a result, $22.5 million was added to the bank’s allowance for loan losses during the second quarter in addition to the $5 million allocated in the first quarter.
Nonperforming assets were $197.9 million or 20.07 percent of total assets at June 30, 2011, compared to $162.6 million or 14.85 percent of total assets at the end of last year and $108.7 million or 8.9 percent of total assets on June 30, last year.
As a result of losses in 2010 and for the first six months of 2011, the bank’s total risk-based capital ratio fell to 3.34 percent at the end of the second quarter, which is well below the adequately capitalized regulatory minimum threshold of 8 percent.