Xenith Bankshares, Inc. Announces Net Income of $5.9 Million for Third Quarter 2012 and $7.0 Million for the Year-to-Date

Xenith Bankshares, Inc. Announces Net Income of $5.9 Million for Third Quarter
2012 and $7.0 Million for the Year-to-Date Period

Reversal of Valuation Allowance on Deferred Tax Asset Contributed $5.0 Million
to Net Income

RICHMOND, Va., Nov. 7, 2012 (GLOBE NEWSWIRE) -- Xenith Bankshares, Inc.
(Nasdaq:XBKS), parent company of Xenith Bank, today announced results for the
three and nine months ended September 30, 2012. The Company reported net
income of $5.9 million, or $0.56 per common share, for the three months ended
September 30, 2012, compared to $6.8 million, or $0.65 per common share, for
the three months ended September 30, 2011. The Company reported net income of
$7.0 million, or $0.67 per common share, for the nine months ended September
30, 2012, compared to $4.2 million, or $0.48 per common share, for the nine
months ended September 30, 2011. Net income in both the three- and nine-month
periods ended September 30, 2012 includes a $5.0 million, or $0.47 per common
share, tax benefit due to the reversal of the valuation allowance on the
Company's net deferred tax asset.Net income in the same periods in 2011
included a bargain purchase gain of $8.7 million from a third quarter 2011
acquisition.

Performance Highlights

  *Net interest income of $5.8 million for the three months ended September
    30, 2012, a 21% increase, compared to $4.8 million for the three months
    ended September 30, 2011. Net interest income of $16.5 million for the
    nine months ended September 30, 2012, a 57% increase, compared to $10.5
    million for the nine months ended September 30, 2011.
  *An annualized increase of 37%, or $89.3 million, in loans held for
    investment and loans held for sale from December 31, 2011.The loans held
    for sale were originated through our participation in a major commercial
    bank's mortgage warehouse lending program, which is further described
    below.
  *An annualized increase of 50%, or $85.7 million, in total demand and money
    market deposits from December 31, 2011.
  *Total assets grew by $80.5 million, an annualized increase of 22%, over
    December 31, 2011.The slower growth in total assets relative to loan
    growth reflects a more efficient balance sheet by deploying excess
    liquidity.
  *Asset quality remained strong with year-to-date net charge-offs as a
    percentage of average loans held for investment of 0.28%, or an annualized
    percentage of 0.37%.
  *Capital ratios are well above regulatory published "well-capitalized"
    levels.Leverage, Tier 1 and Total Capital ratios were 13.0%, 17.0%, and
    18.2%, respectively, as of September 30, 2012.

"We continued making good progress during the third quarter of 2012 and
reported our fifth consecutive quarter of earnings," said T. Gaylon Layfield,
III, President and Chief Executive Officer."While much remains to be
accomplished, our focused strategy is proving to be a foundation for
continuing growth and increasing profitability, the ultimate determiners of
shareholder value.Our increase of 21% in net interest income reflected the
continuing growth in loans funded by strong core deposit growth.We were also
pleased to reverse our deferred tax valuation allowance which added $5.0
million to our net income for the quarter and year-to-date periods.On the
important measures of capital strength and credit quality, we continue to
report strong ratios.In addition, our allowance for loan and lease losses
(ALLL) was $4.7 million, or 1.37% of loans held for investment, which when
combined with $9.0 million of remaining discount related to our acquisitions,
totaled 4.0% of total gross loans held for investment as of September 30,
2012.Finally, we continue to monitor carefully the slowly unfolding strategic
repositioning of our industry as merger and acquisition activity occurs.As
evidenced by our two acquisitions in 2011, we believe there can be
opportunities for Xenith when the right circumstances align."

Interest income grew by 21% in the three months ended September 30, 2012, to
$6.8 million, reflecting a $127.1 million increase in average interest-earning
assets compared to the three months ended September 30, 2011. Interest income
grew by 59% in the nine months ended September 30, 2012, to $19.5 million,
reflecting a $187.0 million increase in average interest-earning assets
compared to the nine months ended September 30, 2011. Interest expense
increased 21% for the three months ended September 30, 2012, to $1.0 million
compared to the three months ended September 30, 2011, reflecting an $81.1
million increase in average interest-bearing liabilities.Interest expense
increased 68% for the nine months ended September 30, 2012, to $3.0 million
compared to the nine months ended September 30, 2011, reflecting a $134.8
million increase in average interest-bearing liabilities.Net interest income
was $5.8 million for the three months ended September 30, 2012, an increase of
$1.0 million, or 21%, compared to the three months ended September 30, 2011.
Net interest income was $16.5 million for the nine months ended September 30,
2012; an increase of $6.0 million, or 57%, compared to the nine months ended
September 30, 2011.

Net interest margin for the three months ended September 30, 2012 was 4.54%,
down 47 basis points, compared to 5.01% for the three months ended September
30, 2011.Net interest margin for the nine months ended September 30, 2012 was
4.58%, down 18 basis points, compared to 4.76% for the nine months ended
September 30, 2011.Acquisition accounting adjustments include loan discount
accretion of $1.1 million and $1.2 million, respectively, for the three months
ended September 30, 2012 and 2011, and $2.7 million and $2.1 million,
respectively, for the nine months ended September 30, 2012 and
2011.Acquisition accounting adjustments in the three and nine months ended
September 30, 2011 also include a reduction to interest expense of $270
thousand and $810 thousand, respectively.Excluding the effect of these
acquisition accounting adjustments, net interest margin for the three months
ended September 30, 2012 increased 28 basis points, to 3.72%, from 3.44% for
the same period in 2011, and net interest margin for the nine months ended
September 30, 2012 increased 39 basis points, to 3.84%, from 3.45% for the
same period in 2011.Average interest-earning assets as a percentage of total
assets were 95.1% and 94.8%, respectively, for the three- and nine-month
periods ended September 30, 2012, an increase from 93.7% and 92.1%,
respectively, for the same periods in 2011.

Beginning in March 2012, we began a program of participating with a major
commercial bank (the "participating bank") in their nationwide program of
extending credit to mortgage companies that originate residential mortgage
loans for sale in the secondary market.We purchase sub-participations from
the participating bank with respect to selected non-bank mortgage originators
that are seeking funding to facilitate their ability to originate mortgage
loans. The originators close mortgage loans consistent with underwriting
standards established by approved investors and, once the loans close, the
originators deliver the loans to the investor. Substantially all of the loans
are conforming loans.Together with the bank, we typically purchase up to an
aggregate 99% participation interest with the selected originators financing
the remaining percentage. These loans are held for short periods, usually
less than 30 days and more typically 10-25 days. Accordingly, these loans are
classified as held for sale and are carried at the lower of cost or fair
value, determined on an aggregate basis.Importantly, we underwrite each loan
originator borrower in a manner consistent with our underwriting standards.
Our participations averaged $41.8 million for the nine months ended September
30, 2012. Our total participations with the bank were $74.6 million at
September 30, 2012.

Non-interest expense decreased $0.6 million to $4.4 million for the three
months ended September 30, 2012, compared to the three months ended September
30, 2011, primarily due to acquisition-related costs incurred in the 2011
period. Non-interest expense increased $1.7 million to $13.6 million for the
nine months ended September 30, 2012 compared to the nine months ended
September 30, 2011. The increase in non-interest expense was primarily due to
higher compensation and benefits as we hired the personnel associated with the
Paragon branch, which we acquired in the third quarter of 2011.

In the third quarter of 2012, we recorded a tax benefit of $5.0 million in net
income and $0.6 million tax expense in other comprehensive income, due to the
reversal of the valuation allowance on our net deferred tax asset. We
evaluated our cumulative profitability since the merger with First Bankshares,
Inc., in addition to other factors, and the likelihood that our deferred tax
asset would be recoverable.Based on all factors considered, we concluded that
it was more likely than not the deferred tax asset would be utilized, and
therefore the reversal of the valuation allowance was appropriate as of
September 30, 2012.

Profile

Xenith Bankshares, Inc. is the holding company for Xenith Bank.Xenith Bank is
a full-service, locally-managed commercial bank, specifically targeting the
banking needs of middle market and small businesses, local real estate
developers and investors, private banking clients, and select retail banking
clients.As of September 30, 2012, the Company had total assets of $558.0
million and total deposits of $448.1 million.Xenith Bank's target markets are
the Washington, DC-MD-VA-WV, Richmond-Petersburg, VA, and the Norfolk-Virginia
Beach-Newport News, VA-NC metropolitan statistical areas.The Company is
headquartered in Richmond, Virginia and currently has six branch locations in
Tysons Corner, Richmond and Suffolk, Virginia.Xenith Bankshares common stock
trades on the NASDAQ Capital Market under the symbol "XBKS."

For more information about Xenith Bankshares and Xenith Bank, visit our
website: https://www.xenithbank.com/.

All statements other than statements of historical facts contained in this
press release are forward-looking statements.Forward-looking statements made
in this press release reflect beliefs, assumptions and expectations of future
events or results, taking into account the information currently available to
Xenith Bankshares, Inc.These beliefs, assumptions and expectations may change
as a result of many possible events, circumstances or factors, not all of
which are currently known to Xenith Bankshares.If a change occurs, Xenith
Bankshares' business, financial condition, liquidity, results of operations
and prospects may vary materially from those expressed in, or implied by, the
forward-looking statements.Accordingly, you should not place undue reliance
on these forward-looking statements.Factors that may cause actual results to
differ materially from those contemplated by these forward-looking statements
include the risks discussed in Xenith Bankshares' public filings with the
Securities and Exchange Commission, including those outlined in Part I, Item
1A, "Risk Factors" of Xenith Bankshares' Annual Report on Form 10-K for the
year ended December 31, 2011.Except as required by applicable law or
regulations, Xenith Bankshares does not undertake, and specifically disclaims
any obligation, to update or revise any forward-looking statement.

Contact:
Thomas W. Osgood
Executive Vice President, Chief Financial Officer,
Chief Administrative Officer and Treasurer
(804) 433-2209
tosgood@xenithbank.com

                      -Selected Financial Tables Follow-

XENITH BANKSHARES, INC.                                     
SELECTED FINANCIAL INFORMATION                              
                                                           
BALANCE SHEET DATA                                          
                                         (unaudited)        
($ in thousands)                          September 30, 2012 December 31, 2011
                                                           
Total assets                              $558,011         $477,465
Total cash and cash equivalents           50,804            55,795
Securities available for sale at fair     62,574            68,466
value
Loans held for sale                       74,632            --
Loans held for investment, net of
allowance for loan and lease losses, 2012 336,495           321,859
-- $4,658;2011 -- $4,280
Deposits                                  448,144           375,007
Borrowings                                20,000            20,000
Total shareholders' equity               87,172            80,304

                                                                 
STATEMENTS OF OPERATIONS DATA                                     
                                    (unaudited)          (unaudited)
                                    Three Months Ended   Nine Months Ended
                                     September 30,        September 30,
($ in thousands, except per share    2012       2011      2012       2011
data)
                                                                 
Total interest income (1)            $6,813   $5,644  $19,483  $12,256
Total interest expense (2)          985       812      3,013     1,797
Net interest income                  5,828     4,832    16,470    10,459
Provision for loan and lease losses  476       1,620    1,383     3,100
Net interest income after provision  5,352     3,212    15,087    7,359
for loan and lease losses
Total non-interest income            (14)      8,581    596       8,775
Total non-interest expense           4,385     4,946    13,586    11,844
Income (loss) before income tax      953       6,847    2,097     4,290
Income tax benefit (expense)        4,950     (58)     4,950     (58)
Net income                           5,903     6,789    7,047     4,232
Earnings per common share (basic and $0.56    $0.65   $0.67    $0.48
diluted)
________________________________                                  
(1) Includes accretion of fair value adjustments of $1.1 million and $1.2
million, respectively, for the three months ended September 30, 2012 and
2011.Includes accretion of fair value adjustments of $2.7 million and $2.1
million, respectively, for the nine months ended September 30, 2012 and 2011.
                                                                 
(2) Includes accretion of fair value adjustments of $0.3 million and $0.8
million for the three and nine months ended September 30, 2011.There are no
fair value adjustments in 2012.

                                                             
SELECTED FINANCIAL                                            
RATIOS
                                                             
PERFORMANCE RATIOS                                             
                        Three Months Ended        Nine Months Ended September
                         September 30,             30,
                        2012         2011         2012          2011
                                                             
Net interest margin (1) 4.54%        5.01%        4.58%         4.76%
Return on average assets 1.09%        1.65%        1.39%         1.33%
Return on average common 7.97%        9.66%        9.64%         6.98%
equity
Efficiency ratio (2)     75%          37%          80%           62%
                                                             
(1) Net interest margin is the percentage of net interest income divided by
average interest-earning assets.
(2) Efficiency ratio is non-interest expenses divided by the sum of net
interest income and non-interest income.
                                                             
                                                             
ASSET QUALITY RATIOS                                          
                                    At September At December   
                                      30,          31,
                                    2012         2011          
                                                             
Non-performing assets as
a percent of total loans             1.52%        2.05%         
held for investment
Non-performing assets as
a percent of total                   0.93%        1.40%         
assets
Net charge-offs as a
percentage of average                0.28%        0.58%         
loans held for
investment
Allowance for loan and lease losses
as a percentage of total loans held   1.37%        1.31%         
for investment (1)
Allowance for loan and
lease losses to                      95.94%       73.01%        
nonaccrual loans (1)
                                                             
(1) Excludes fair value adjustments of $9.0 million as of September 30, 2012
and $14.0 million as of December 31, 2011.
                                                             
                                                             
CAPITAL RATIOS                                                
                        At September At December  Regulatory    Well -
                         30,          31,
                        2012         2011         Minimum       Capitalized
                                                             
Tier 1 leverage ratio    13.02%       13.42%       4.00%         > 5.0%
Tier 1 risk-based        17.01%       17.86%       4.00%         > 6.0%
capital ratio
Total risk-based capital 18.24%       19.08%       8.00%         > 10.0%
ratio

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