<PAGE>

                                                                     Exhibit 4.8

                               ESCROW AGREEMENT

     This Escrow Agreement (this "Agreement") is made and entered into as of the
_______ day of _______, 2001, by and among ANDERSON & STRUDWICK, INC., a
Virginia corporation (the "Underwriter"), COMMONWEALTH BANKSHARES CAPITAL TRUST
I, a statutory business trust organized under Delaware law (the "Trust") and
COMMONWEALTH BANKSHARES, INC., a Virginia corporation (the "Company" and,
together with the Trust, the "Offerors"), and WILMINGTON TRUST COMPANY, a
Delaware banking corporation (the "Escrow Agent").

                                   RECITALS:

     A.   The Offerors propose to sell up to $8,000,000 of _____% Convertible
Preferred Securities with a liquidation amount of $5.00 per convertible
preferred security (the "Preferred Securities"), to the public at a price of
$5.00 per Preferred Security (the "Offering").

     B.   The Offerors have retained the Underwriter, as selling agent for the
Offerors on a best efforts basis, to sell the Preferred Securities in the
Offering, and the Underwriter has agreed to sell the Preferred Securities as the
Offerors' selling agent on a best efforts basis in the Offering, and the
Underwriter has agreed to serve in this capacity, the terms of which
relationship are set forth in an Underwriting Agreement between the Offerors and
the Underwriter, the form of which is attached hereto as Exhibit A (the
                                                         ---------
"Underwriting Agreement").

     C.   The Underwriter will enter into agreements with other brokers/dealers
(the "Selected Dealers" or individually, the "Selected Dealer") to assist in the
sale of the Preferred Securities.

     D.   The Offerors have agreed to pay the Underwriter a commission of 4.0%
of the aggregate amount of Preferred Securities sold in the Offering, up to
$320,000.

     E.   The Escrow Agent is willing to hold the proceeds in escrow pursuant to
this Agreement.

     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained in this Agreement, it is hereby agreed as follows:

     1.   Establishment of the Escrow Account.  On or prior to the date of
          -----------------------------------
commencement of the Offering, the parties shall establish a non-interest-bearing
account with the Escrow Agent, which escrow account shall be entitled
"Commonwealth Bankshares Capital Trust I, Escrow Account" (the "Escrow
Account").  The Underwriter shall make, and shall instruct purchasers and
Selected Dealers to make payment for the Preferred Securities by wire transfer
of immediately available funds as follows:
<PAGE>

          Fed. Funds to be wired to:
          Wilmington Trust Company
          Wilmington, Delaware
          ABA No. 031100092
          for credit to the account of Commonwealth Bankshares Capital Trust I-
          Escrow Account No. _______________
          Attention:  ________________, Corporate Trust Administration
          Telephone No. _______________
          Fax No. ______________

     The Offerors will make payment of the Underwriter's commission as provided
above.

     2.   Deposits into the Escrow Account. Funds received from the Underwriter,
          --------------------------------
purchasers and Selected Dealers shall be deposited in the Escrow Account. All
monies so deposited in the Escrow Account are hereinafter referred to as the
"Escrow Amount." The Escrow Account shall be a non- interest-bearing account.
For the absence of doubt, the Escrow Account shall constitute a "bank account"
(such term may include a savings account or bank money market account), and the
Escrow Amount shall not be invested in any money market funds, corporate equity
or debt securities, repurchase agreements, banker's acceptances, commercial
paper or municipal securities, all in accordance with Rule 15c2-4 under the
Securities Exchange Act of 1934.

     3.   Escrow Period. The escrow period (the "Escrow Period") shall begin on
          -------------
_____________, 2001 and shall terminate at 5:00 p.m. on ____________, 2001, or
such other time as shall be mutually agreed upon in writing by the parties.
During the Escrow Period, the Offerors acknowledge that they are not entitled to
any funds received into escrow and no amounts deposited by the Escrow Agent
shall become property of the Offerors or any other entity, or be subject to the
debts of the Offerors or any other entity.

     4.   Delivery of Escrow Account Proceeds. At the Closing Time as defined in
          -----------------------------------
the Underwriting Agreement, the Underwriter and Offerors shall provide the
Escrow Agent with written directions for the distribution of the Escrow Account,
and the Escrow Agent agrees to distribute the Escrow Account pursuant to such
written directions.  If no direction is received on or before 5:00 p.m., _______
______________, 2001 (unless such time shall be extended by written agreement of
the Underwriter, Offerors and the Escrow Agent), the Escrow Agent shall return
the Escrow Amount to the parties that made payments to the Escrow Account and
this Agreement shall be of no further force or effect.

     5.   Closing Date. The "Closing Time" shall be that date specified in the
          ------------
Underwriting Agreement.

     6.   Duties and Rights of the Escrow Agent. The foregoing agreements and
          -------------------------------------
obligations of the Escrow Agent are subject to the following provisions:

          (a)  The Escrow Agent's duties hereunder are limited solely to the
safekeeping of the Escrow Account in accordance with the terms of this
Agreement. It is agreed that the

                                       2

<PAGE>

Escrow Agent shall have no other duties or obligations hereunder except as
expressly set forth herein, shall be responsible only for the performance of
such duties and obligations, shall not be required to take any action otherwise
than in accordance with the terms hereof, shall not be required to perform any
acts that may violate any applicable laws, and shall not be liable or
responsible in any manner for any loss or damage arising by reason of any act or
omission to act hereunder or in connection with any of the transactions
contemplated hereby, including, but not limited to, any loss or damage that may
occur by reason of forgery, false representation, the exercise of its discretion
in any particular manner or for any other reason, except any loss or damage
arising by reason of its gross negligence or willful misconduct.

          (b)  The Escrow Agent may rely upon, and shall be protected in acting
or refraining from acting upon, any written instructions furnished to it
hereunder and in reasonable good faith believed by it to be genuine or presented
by the proper party or parties, and the Escrow Agent may assume that any person
or entity purporting to give instructions in connection with provisions hereof
has been duly authorized to do so. The Escrow Agent may at any time request
written instructions from the Underwriter and the Offerors with respect to the
interpretation of this Agreement or of any action to be taken or suffered or not
taken hereunder.

          (c)  In the event that the Escrow Agent shall be uncertain about the
interpretation of this Escrow Agreement or about its rights or obligations
hereunder or the propriety of any action contemplated hereunder, or if the
Escrow Agent shall receive instructions with respect to the Escrow Account that
are in its opinion in conflict with any other instructions with respect to the
Escrow Account that it has received or in conflict with any provision of this
Agreement, (i) the Escrow Agent promptly shall notify the Underwriter and the
Offerors (and any other involved parties, if necessary) of such uncertainty or
inconsistent instructions, (ii) the Escrow Agent shall be entitled to refrain
from taking any action other than to keep safely the Escrow Account until it
shall be directed otherwise in writing signed by the Underwriter and the
Offerors (and any other involved parties, if necessary) or by a final order or
judgment of a court of competent jurisdiction, and (iii) if the Escrow Agent
does not receive a notice signed by the Underwriter and the Offerors (and any
other involved parties, if necessary) resolving such uncertainty or inconsistent
instructions within a reasonable time, the Escrow Agent shall have the right
(but not the obligation) to file suit in interpleader and obtain an order or
judgment from a court of competent jurisdiction requiring all persons involved
to interplead and litigate in such court their several claims and rights among
themselves and, upon the conclusion thereof, to act in accordance with the
resolution of such litigation.

     7.   Indemnification and Fees of the Escrow Agent.  The Underwriter and the
          --------------------------------------------
Offerors hereby jointly and severally agree to indemnify, defend and save
harmless the Escrow Agent from and against any and all losses, expenses
(including without limitation, reasonable fees, disbursements and other expenses
of counsel), assessments, liabilities, claims, damages, actions, suits or other
charges incurred by or assessed against the Escrow Agent for anything done or
omitted by it in the performance of its duties hereunder other than as a result
of its gross negligence or willful misconduct.  In addition to the foregoing,
                  -
the Underwriter and the Offerors hereby agree that the Escrow Agent shall deduct
from the Escrow Account prior to distributing or delivering the Escrow Account
in accordance with Section 8 hereof reasonable compensation for the services
rendered by the Escrow Agent hereunder.

                                       3
<PAGE>

     8.   Resignation and Replacement of the Escrow Agent.
          -----------------------------------------------

          (a)  The Escrow Agent may resign at any time and thereupon he
discharged of its duties and obligations as escrow agent hereunder by giving
five (5) days prior written notice thereof to the Underwriter and Offerors. Upon
expiration of such five day period, the Escrow Agent shall take no further
action until the Underwriter and the Offerors have jointly appointed a successor
escrow agent. Upon receipt of written instructions signed by the Underwriter and
the Offerors, the Escrow Agent shall promptly turn over the Escrow Account to
the successor escrow agent. The Escrow Agent shall thereafter have no further
duties or obligations hereunder.

          (b)  The Escrow Agent may be removed and discharged from its duties
and obligations as escrow agent hereunder upon the mutual agreement of the
Underwriter and the Offerors by delivering a written notice executed by the
Underwriter and the Offerors of such removal to the Escrow Agent specifying the
date when such removal shall be effective (but such a removal shall in no event
be effective prior to the appointment of a successor escrow agent). In the event
of such removal, the Underwriter and the Offerors shall, within thirty (30) days
after such notice, jointly appoint a successor escrow agent and, upon receipt of
written instructions signed by the Underwriter and the Offerors, the Escrow
Agent shall promptly turn over the Escrow Account to such successor escrow
agent. The Escrow Agent shall thereafter have no further duties or obligations
hereunder.

     9.   Notices.  It is further agreed as follows:
          -------

          (a)  All notices given hereunder will be in writing, served by
registered or certified mail, return receipt requested, postage prepaid, or by
hand-delivery, to the parties at the following addresses:

          To the Offerors:

          Commonwealth Bankshares, Inc.
          403 Boush Street
          Norfolk, VA 23510
          Attention:  Edward J. Woodard, Jr.

          To the Underwriter:

          Anderson & Strudwick, Inc.
          1108 East Main Street
          P.O. Box 1459
          Richmond, VA 23219
          Attention:  L. McCarthy Downs, III

          To the Escrow Agent:

          Wilmington Trust Company

                                       4
<PAGE>

          1100 North Market Street
          Wilmington, Delaware 19890
          Attention:  ___________________

     10.  Miscellaneous.
          -------------

          (a)  This Agreement shall be binding upon, inure to the benefit of and
be enforceable by the parries hereto and their respective successors and
assigns.

          (b)  If any provision of this Agreement shall be held invalid by any
court of competent jurisdiction, such holding shall not invalidate any other
provision hereof.

          (c)  This Agreement shall be governed by the applicable laws of the
State of Delaware.

          (d)  This Agreement may not be modified except in writing signed by
the parties hereto.

          (e)  All demands, notices, approvals, consents, requests and other
communications hereunder shall be given in the manner provided in this
Agreement.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their respective names, all as of the date first above written.

                                    ANDERSON & STRUDWICK, INC.


                                    By: _____________________________
                                           L. McCarthy Downs, III
                                           Senior Vice President


                                    COMMONWEALTH BANKSHARES CAPITAL TRUST I


                                    By: _____________________________
                                           Edward J. Woodard, Jr.
                                           Administrative Trustee


                                    COMMONWEALTH BANKSHARES, INC.

                                       5
<PAGE>

                                    By: _____________________________
                                           Edward J. Woodard, Jr.
                                           President and Chief Executive
                                           Officer


                                    WILMINGTON TRUST COMPANY


                                    By: _____________________________
                                           Donald G. MacKelcan
                                           Assistant Vice President

                                       6