Central Virginia Bankshares Reports Third Quarter 2009 Results

POWHATAN, Va., Nov. 16 /PRNewswire-FirstCall/ -- Central Virginia Bankshares,
Inc. (Nasdaq: CVBK) announced another significant improvement in third quarter
2009 core earnings when compared to the preceding second and first quarter's
core earnings. Core earnings are net income after adjustment for the after tax
effect of several significant income and expense items, specifically:
securities gains and losses, non-cash other than temporary impairment
write-downs, and the FDIC special assessment. The company's third quarter 2009
core after tax earnings were $571,368 compared to $395,060 in the second
quarter and $248,732 in the first quarter 2009 and $942,656 in the third
quarter of the prior year. Third quarter securities gains and losses net to a
loss of $224,975, a non-cash other than temporary impairment "OTTI" write-down
of four securities totaling $2,231,331. The net after tax effect of these
items resulted in the Company's reporting a net loss of $1,050,669 for the
third quarter 2009 compared to a net loss of $16,893,841 in the third quarter
of 2008. The net loss available to common shareholders after accounting for
accrued dividends and accretion of discount on preferred stock totaling
$160,588 was a loss of $1,211,257. On both a basic and fully diluted basis,
the loss per common share for the third quarter 2009 was $0.46, an improvement
of $6.08 versus the loss of $6.54 per share in the third quarter of the prior
year. For third quarter 2009, the return on average assets was -0.85 percent
versus the prior year's -13.59 percent. The return on average shareholders'
equity was -12.94 percent compared to -227.11 percent in last year's third
quarter. At quarter end 2009, total shareholders' equity was $34.0 million,
versus $12.8 million in the prior year. The book value of a share of common
stock was $13.02 compared to $4.93 at third quarter 2008.

R. Larry Lyons, President and CEO of Central Virginia Bankshares, Inc.,
commented: "We are living through an unprecedented period with the stress of
the economic recession affecting everyone and financial institutions are no
exception. It is unfortunate that we must report a loss, however we believe
the future periods will show a continued improvement in our core earnings,
which have more than doubled since the first quarter of this year. The core
bank is profitable and is recovering from the effects of the FNMA and FHLMC
write-off in the third and fourth quarters of last year. Despite having to
report a loss, there were several positive factors in the third quarter.
Compared to the second and first quarters of 2009, our core earnings show
solid improvement; our net interest income and margin have both increased, and
our non-interest expense has declined... If we disregard the after tax effect
of the OTTI and securities losses, the Company would have had third quarter,
net income of approximately $571,368 and net income available to common
shareholders of $410,780."

On a linked quarter basis, third quarter 2009 after tax core earnings improved
to $571,368 as compared to the second quarter's core after tax earnings of
$395,060. In addition, third quarter core earnings include a loan loss
provision of $968,236, an increase of $418,236 over the $550,000 provision in
the second quarter 2009. The book value of a share of common stock improved by
$1.32 or 11 percent to $13.02 from the second quarter's $11.70. Net interest
income, on a fully tax equivalent basis, in the third quarter was $3.80
million versus $3.47 million in the second quarter. The net interest margin
also improved to 3.29 percent compared to 2.93 percent in the second quarter.
Non-interest income was $654,963 which included securities losses of $224,975
or $879,938 without the effect of securities transactions compared to
$1,394,056 which included securities gains of $531,946 or $862,110 without the
effect of securities in the second quarter. Non-interest expense exclusive of
the OTTI in the third quarter was $3,045,389 compared to $3,055,557 excluding
the special FDIC assessment and the OTTI in the second quarter.

In the third quarter 2009, the fully tax equivalent net interest income was
$3.80 million, an increase of $105,174 or 2.8 percent compared to $3.70
million in the third quarter of 2008. The tax equivalent net interest margin
was 3.29 percent for the quarter compared to 3.08 percent in third quarter
2008. The average earning assets during the quarter were $461.8 million
compared to $479.3 million in third quarter of 2008. This reduction in earning
assets is the result of our strategy of shrinking the balance sheet by
reducing borrowings and securities, and reducing both interest and
non-interest expense. The net interest margin compression, experienced over
the past several reporting periods, appears to have abated. The improvement in
this measure is largely the result of our restructuring the balance sheet;
specifically, the growth in deposits has allowed us to reduce borrowings,
effectively deleveraging the Company. The continued favorable interest rate
environment has allowed us to continue our sales of 100 percent risk weighted
investment securities, replacing a portion of that sold with zero or 20
percent risk weighted securities and improving our regulatory capital ratios,
as well as our net interest margin. We continue the tactics undertaken earlier
this year largely to mitigate the effect of the absence of $18.8 million in
earning assets resulting from the write-off of our FNMA and FHLMC preferred
stock investments in the third and fourth quarters of 2008. In view of the
present low rate environment the Company may continue to utilize some short
term funding rather than more expensive retail CD deposits to fund a portion
of its earning assets.

Non-interest income for the quarter was $654,963 a decrease of $234,851 or
26.4 percent from the prior year's third quarter total of $889,814. However if
you exclude the securities losses of $224,975 in 2009 and gains of $21,747 in
2008 the remaining non-interest income would be $879,983 versus $868,067 a
decline of only 1.4 percent. For third quarter 2009, fees on secondary market
mortgage loan sales more than doubled to $59,541 due to the steady volume of
refinances as well as home purchase loans, while commissions from sales of
non-deposit investment products declined by 70.3 percent to $28,224 due to the
drop in demand for many investment products.

Non-performing assets at the end of the third quarter 2009 increased to $19.9
million an increase of $4.6 million or 30.0 percent compared to the second
quarter of 2009 and when compared to third quarter 2008, the increase was $9.7
million or 94.4 percent. The increase from second quarter 2009 was largely due
to classifying $3.0 million in investment securities where OTTI has been
recognized, as "other non-performing assets". Notwithstanding the securities,
the remaining non-performing assets are up only $1.6 million from $15.3
million in the preceding second quarter 2009, but are down by $1.9 million
from $18.8 million in the first quarter 2009. The increase from the prior
year's third quarter is the result of the depressed real estate market and the
overall economic recession resulting in $2.8 million growth in ninety day past
due loans and $4.2 million increase in other real estate owned due to
foreclosures, however, non-accrual loans declined by $363,890 to $9.1 million.
The growth in non-performing assets continues to be a concern, however with
the majority of past due and non-accrual loans being secured, the ultimate
impact of any losses, should they occur, will be reduced.

During the third quarter 2009, $968,236 was added to the allowance for loan
losses in response to impairment analysis of non-performing loans and the
general state of the local economy; in contrast to the third quarter 2008,
when $300,000 was added to the loan loss reserve. At its current level of
$4,830,228 or 1.61 percent of total loans, we believe that the reserve should
be adequate to absorb future losses. The reserve was $4,005,228 or 1.34
percent at the end of the preceding second quarter 2009 and was $3,588,520 or
1.21 percent of total loans at the end of the third quarter 2008. We
anticipate additional funds will be added to the reserve in future periods at
least at the same or greater levels than the past in view of the uncertainties
surrounding the extent and timing of the recovery of the real estate markets
and our economy in general. Our goal in future quarters is to offset net
charge-offs during the quarter and still increase the ratio beyond 1.61
percent of total loans. The reserve for loan losses now represents 24.3
percent of quarter-end non-performing assets, compared to 35.1 percent in the
third quarter of the prior year.

At the end of the third quarter, the Company conducted its fair value
impairment analysis in accordance with EITF 99-20-1 and determined there was
"Other than Temporary Impairment" on four collateralized debt obligation
securities which have pools of bank trust preferred securities as collateral.
The Company accordingly recognized $2,231,331 in non-cash Other than Temporary
Impairment (OTTI) charges thereby permanently reducing the carrying value of
these securities. The recognition of this OTTI contributed significantly to
the loss we are reporting in the third quarter, and depending on the number
and extent of further deferrals or defaults by banks in the collateral pools
of these securities, subsequent quarters' impairment analysis may require
recognition of additional OTTI.

Average earning assets in the third quarter were $461.8 million, a decrease of
$17.5 million or 3.7 percent compared to $479.3 million in the comparable
quarter last year. Average loan balances were $298.4 million, an increase of
$5.0 million or 1.7 percent from the prior year's third quarter average
balances of $293.3 million. The bank's investment securities portfolio
averaged $153.9 million, a decrease of $31.1 million or 16.8 percent from
$185.1 million in third quarter 2008, while overnight funds sold averaged $7.3
million a significant increase from $32.3 thousand average in third quarter of
the prior year. Total deposits averaged $377.6 million, a substantial increase
of $20.3 million or 5.7 percent compared to $357.3 million in the third
quarter 2008. Total borrowings, consisting of overnight fed funds purchased,
wholesale and retail repurchase agreements, overnight advances and term
borrowings from the Federal Home Loan Bank, and long-term capital trust
preferred, averaged $78.0 million a decrease of $29.1 million or 27.1 percent
from the prior year's third quarter average of $107.1 million. Total assets
averaged $491.9 million, a reduction of $5.4 million or 1.1 percent from
$497.3 million in the prior year.

Non-interest expense in the third quarter 2009 totaled $5.28 million a
decrease of 75.2 percent or $15.97 million when compared to $21.24 million
last year. The decrease is due to last year's recordation of $17.85 million
OTTI non-cash write-down of the majority of our FNMA and FHLMC preferred stock
investments in the third quarter 2008. Virtually all of the non-interest
expense categories are lower when compared to third quarter 2008; the only
three exceptions are FDIC premiums, up $73,401 or 98.7 percent due to the
extinguishment of our prior period credit coupled with our growth in deposits;
data processing expense, up $88,837 due to the outsourcing of our core
processing in the fourth quarter of last year; and office supplies and postage
up $3,992 or 3.2 percent. The significant categories with declines are as
follows along with the percentage decline from the third quarter of the prior
year: salaries and benefits down $323,515 or 17.1 percent, equipment repairs
and maintenance, down $44,480 or 43.7 percent, other miscellaneous operating
expense, down $40,025 or 7.2 percent, consulting fees down $37,843 or 40.7
percent, advertising and public relations, down $24,012 or 26.2 percent,
equipment depreciation, down $22,221 or 14.3 percent. It is obvious our
expense control discipline has been successful and will continue to benefit
the Company. The efficiency ratio for the third quarter exclusive of OTTI,
securities gains and losses, and the special FDIC assessment was 65.0 percent
compared to 74.3 percent in third quarter 2008.

Mr. Lyons, commented: "...over our 36 year history, the past twelve months, by
far, have been the most unprecedented economic conditions our Company has
experienced and endured. Despite this, I remain encouraged by our third
consecutive quarter of increasing core earnings. Our earnings continue to be
adversely effected by OTTI, ("Other Than Temporary Impairment") on several of
our securities due to the extraordinary stress the national economic
environment has had on the banking industry, in addition to the need to
increase our reserve for possible loan losses, which currently exceeds 1.61
percent of loans. Our Company remains profitable exclusive of these non-cash
impairment write-downs, as evidenced by our core earnings more than doubling
from $248,732 in the first quarter this year to $571,368 in the third quarter.
Over this same period, our tax equivalent net interest income and margin have
improved from $3.11 million and 2.62 percent to $3.80 million and 3.29
percent. Our non-performing assets exclusive of the addition of $3 million in
non-performing securities increased from the second quarter but declined from
the first quarter. Our deposits have been steadily growing and we have
restructured our balance sheet to reduce leverage and improve profitability.
We realize there are factors, many of which are beyond our control, as well as
uncertainties which will impact our future performance. Specifically, the
impact of the continuing real estate market slow-down coupled with the general
economic weakness which has had, and likely will continue to have, a negative
impact on the ability of some borrowers to repay their loans. In addition we
face the prospect of additional impairment of certain CDO securities in the
bank's investment portfolio. However, our bank is "well capitalized" with a
regulatory risk-based capital ratio of 10.7 percent, and we expect this
measure will improve in future periods. I continue to firmly believe we are
pursuing the correct course and will emerge from this environment a stronger
and more viable financial institution remaining committed to prudent market
expansion, emphasizing deposit growth and products, while serving our
communities with both business and personal loans and financial products
thereby fulfilling our goal of improving shareholder value"

Readers are cautioned that this press release may contain forward-looking
statements made pursuant to safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are based on
management's current knowledge and assumptions about future events, and may
address issues that involve significant risks, uncertainties, and estimates,
that may cause actual results to differ materially from the anticipated
results or other expectations expressed in the forward-looking statements.

Central Virginia Bankshares, Inc. is the parent of Central Virginia Bank, a 36
year old $479 million community bank with its headquarters and main office in
Powhatan County, and six additional branch offices; two branches in the
adjacent County of Cumberland, three branches in western Chesterfield County,
and one branch in western Henrico County.

Selected Financial Data Follows for Central Virginia Bankshares, Inc.:

Central Virginia Bankshares, Inc.

Third quarter (Unaudited) Year to Date (Unaudited)
September September September September
30, 2009 30, 2008 30, 2009 30, 2008

Net Income (Loss) (1,050,669) (16,893,841) (884,889) (15,088,759)
Net Income Available
to Common Shareholders (1,211,257) (16,893,841) (1,314,703) (15,088,759)
Interest & Fees
On Loans 4,917,876 4,867,173 13,781,374 14,837,593
Interest on
Investments 1,794,887 2,438,203 5,946,762 7,837,817
Interest on Funds Sold 5,466 145 14,666 1,749
Interest on Deposits 2,487,849 2,842,022 7,760,908 9,034,954
Interest on
Borrowings 512,465 899,890 1,835,547 2,569,240
Interest Expense 3,000,314 3,741,912 9,596,455 11,604,194
Net Interest Income 3,717,915 3,563,609 10,146,347 11,072,965
Net Interest Income
(FTE) 3,802,914 3,697,739 10,414,379 11,571,072
Non Interest Income 654,963 889,814 2,997,231 2,685,271
Loan Loss Provision 968,236 300,000 1,893,236 880,000
Non Interest Expense 5,276,720 21,243,584 12,876,963 27,688,508

Period End Balances:
--------------------
Investment Securities 122,504,150 145,941,837
Fed Funds Sold 6,859,000 -
Loans (net of Unearned
Discount) 299,094,836 296,800,112
Loan Loss Reserve 4,830,228 3,588,520
Non Interest Bearing
Deposits 36,259,890 38,490,727
Total Deposits 378,689,414 349,340,190
Borrowings 62,946,658 115,403,128
Assets 478,779,547 480,794,871
Period End
Shareholders Equity 34,044,258 12,755,502

Average Balances:
-----------------
Average Assets 491,925,767 497,318,977 500,309,365 496,328,290
Average Earning
Assets 461,795,062 479,293,397 470,345,383 472,798,960
Investment Securities 153,972,476 185,091,474 162,656,359 189,727,257
Federal Funds Sold 7,336,533 32,250 8,934849 87,821
Loans Held for Sale 2,129,393 820,734 1,608,251 951,576
Loans (net of
Unearned) 298,356,670 293,348,940 297,145,924 282,032,307
Non Interest Bearing
Deposits 37,630,214 40,462,531 39,430,760 40,563,617
Total Deposits 377,643,113 357,308,315 373,855,464 362,119,779
FHLB Overnight
Advances 7,934,783 14,445,435 11,362,637 11,755,496
FHLB Term Borrowings 40,000,000 45,000,000 42,289,377 45,000,000
Fed Funds Purchased
& REPO 24,943,512 42,408,495 32,919,780 34,723,923
Long term debt,
Capital Trust
Preferred 5,155,000 5,155,000 5,155,000 5,155,000
Average Shareholders'
Equity 32,487,093 29,754,279 29,266,369 34,463,213
Average Shares
Outstanding - Basic 2,609,152 2,581,760 2,603,247 2,576,578
Average Shares
Outstanding - Fully
Diluted 2,609,152 2,581,760 2,603,247 2,576,578

Asset Quality:
--------------
Charged Off Loans 148,868 78,032 890,162 252,024
Recoveries 5,632 11,028 30,696 48,462
Period End:
Non-Accrual Loans 9,057,652 9,421,542
Loans Past Due 90 Days
or More 4,353,276 142,051
Other Non Performing
Assets 2,981,305 0
Other Real Estate 3,509,864 673,543
Total Non Performing
Assets 19,902,097 10,237,136

Per Share Data & Ratios:
------------------------
Net Income (loss) Per
Share - Basic ($0.46) ($6.56) ($0.50) ($5.86)
Net Income (loss) Per
Share - Diluted ($0.46) ($6.56) ($0.50) ($5.86)
Period End Book Value
Per Share $13.02 $4.93
Return on Average
Assets (0.85%) (13.59%) (0.24%) (4.05%)
Return on Average
Equity (12.94%) (227.11%) (4.03%) (58.38%)
Efficiency Ratio 118.37% 463.07% 96.00% 194.22%
Average Loans to
Average Deposits 79.00% 82.10% 79.48% 77.88%
Reserve for Loan
Losses/Loans EOP 1.62% 1.21%
Net Interest Margin
(FTE) 3.29% 3.09% 2.95% 3.26%

SOURCE Central Virginia Bankshares, Inc.

Charles F. Catlett, III - Senior Vice President and Chief Financial Officer,
+1-804-403-2002