The Federal Reserve Board has given the troubled Commonwealth Bankshares Inc. in Norfolk, Va., until the end of July to either raise fresh capital or find a buyer.

In a Securities and Exchange Commission filing Thursday, the $1 billion-asset parent of the Bank of the Commonwealth said that it received a Prompt Corrective Action from the Fed on July 1 that  orders it to return the bank adequately capitalized levels within 30 days. The bank is considered to be undercapitalized.

If the bank fails to raise capital on its own by July 31 and the Fed does not grant it an extension, it must "enter into and close a contract to be acquired by a depository institution holding company or combine with another depositor institution," according to the Fed order.

In a news release, Commonwealth said that its bank's capital levels declined after a "significant number" of earning assets were moved to nonaccruing status. Many loans were also downgraded based on new appraisals and evaluations.

Commonwealth said it has hired investment banks FIG Partners LLC of Atlanta and McKinnon & Co. Inc. of Norfolk, Va., to help it explore its options for raising capital.  In a statement, President and Chief Executive Officer Chris Beisel said that capital-raising efforts are progressing, but that "we still have a distance to go in overcoming our challenges."

Commonwealth's shares have been trading at below $1 since the end of March. At midday Friday the stock was were trading at 48 cents.

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