##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2010
 Commission File Number: 001-32968
 HAMPTON ROADS BANKSHARES, INC.
  Virginia
    
    54-2053718(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer Identification No.)999 Waterside Drive, Suite 200, Norfolk, Virginia
    
    23510(Address of principal executive offices)
    
    (Zip Code)
 (757) 217-1000  (Registrants telephone number, including area code)
  þ o
  o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
(do not check if smaller reporting company)
    
    Smaller reporting company o
  o þ




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##### 



PagePART I  FINANCIAL INFORMATIONITEM 1   FINANCIAL STATEMENTSConsolidated Balance Sheets
    
    
    3September 30, 2010December 31, 2009Consolidated Statements of Operations
    
    
    4Three months ended September 30, 2010 and 2009Nine months ended September 30, 2010 and 2009Consolidated Statement of Changes in Shareholders Equity
    
    
    5Nine months ended September 30, 2010Consolidated Statements of Cash Flows
    
    
    6Nine months ended September 30, 2010 and 2009Notes to Consolidated Financial Statements
    
    
    8ITEM 2   MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    31ITEM 3   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
    
    
    45ITEM 4  CONTROLS AND PROCEDURES
    
    
    46PART II  OTHER INFORMATIONITEM 1   LEGAL PROCEEDINGS
    
    
    47ITEM 1A   RISK FACTORS
    
    
    47ITEM 2   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
    
    
    59ITEM 3   DEFAULTS UPON SENIOR SECURITIES
    
    
    59ITEM 4   REMOVED AND RESERVED
    
    
    59ITEM 5   OTHER INFORMATION
    
    
    59ITEM 6   EXHIBITS
    
    
    60SIGNATURES
    
    
    62EX-4.1EX-4.2EX-4.3EX-4.4EX-4.5EX-4.6EX-31.1EX-31.2EX-32.1
  2




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##### Table of Contents



HAMPTON
ROADS BANKSHARES, INC.
 
 PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 
 CONSOLIDATED BALANCE SHEETS
 (Unaudited)
    
    
    As Restated(in thousands, except share and per share data)
    
    September 30, 2010
    
    
    December 31, 2009Assets:Cash and due from banks
    
    $
    19,198
    
    
    $
    16,995Interest-bearing deposits in other banks
    
    
    1,268
    
    
    
    43,821Overnight funds sold and due from Federal Reserve Bank
    
    
    640,527
    
    
    
    139,228Investment securities available for sale, at fair value
    
    
    168,781
    
    
    
    161,062Restricted equity securities, at cost
    
    
    21,378
    
    
    
    29,779Loans held for sale
    
    
    34,726
    
    
    
    12,615Loans
    
    
    2,101,085
    
    
    
    2,426,692Allowance for loan losses
    
    
    (163,253
    )
    
    
    (132,697
    )Net loans
    
    
    1,937,832
    
    
    
    2,293,995Premises and equipment, net
    
    
    94,526
    
    
    
    97,512Interest receivable
    
    
    6,530
    
    
    
    8,788Foreclosed real estate and repossessed assets,
net of valuation allowance
    
    
    38,584
    
    
    
    8,867Deferred tax asset, net
    
    
    
    
    
    
    397Intangible assets, net
    
    
    11,353
    
    
    
    12,839Bank-owned life insurance
    
    
    49,619
    
    
    
    48,355Other assets
    
    
    43,250
    
    
    
    45,323Total assets
    
    $
    3,067,572
    
    
    $
    2,919,576Liabilities and Shareholders Equity:Deposits:Noninterest-bearing demand
    
    $
    252,085
    
    
    $
    248,682Interest-bearing:Demand
    
    
    771,376
    
    
    
    916,865Savings
    
    
    73,110
    
    
    
    82,860Time deposits:Less than $100
    
    
    778,153
    
    
    
    889,788$100 or more
    
    
    718,386
    
    
    
    356,845Total deposits
    
    
    2,593,110
    
    
    
    2,495,040Federal Home Loan Bank borrowings
    
    
    219,169
    
    
    
    228,215Other borrowings
    
    
    49,703
    
    
    
    49,254Interest payable
    
    
    3,731
    
    
    
    3,573Other liabilities
    
    
    33,316
    
    
    
    18,481Total liabilities
    
    
    2,899,029
    
    
    
    2,794,563Commitments and contingenciesShareholders equity:Preferred stock - 1,000,000 shares authorized:Series A non-convertible, non-cumulative perpetual
preferred stock, $1,000 liquidation value, 0 and 23,266
shares issued and outstanding on September 30, 2010
and December 31, 2009
    
    
    
    
    
    
    19,919Series B non-convertible, non-cumulative perpetual
preferred stock, $1,000 liquidation value, 0 and 37,550
shares issued and outstanding on September 30, 2010
and December 31, 2009
    
    
    
    
    
    
    39,729Series C fixed rate, cumulative preferred stock, $1,000
liquidation value, 0 and 80,347 shares issued and outstanding
on September 30, 2010 and December 31, 2009
    
    
    
    
    
    
    75,322Common stock, $0.01 par value on September 30, 2010 and $0.625 par
value on December 31, 2009, 1,000,000,000 shares authorized
on September 30, 2010 and 100,000,000 on December 31, 2009;
684,680,352 shares issued and outstanding on September 30, 2010
and 22,154,320 on December 31, 2009
    
    
    6,847
    
    
    
    13,846Capital surplus
    
    
    410,866
    
    
    
    165,391Retained deficit
    
    
    (252,994
    )
    
    
    (188,448
    )Accumulated other comprehensive income (loss), net of tax
    
    
    3,400
    
    
    
    (746
    )Total
Hampton Roads Bankshares, Inc. shareholders equity
    
    
    168,119
    
    
    
    125,013Noncontrolling interest
    
    
    424
    
    
    
    Total shareholders equity
    
    
    168,543
    
    
    
    125,013Total liabilities and shareholders equity
    
    $
    3,067,572
    
    
    $
    2,919,576
 See
accompanying notes to the consolidated financial statements.
 3




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##### Table of Contents



HAMPTON
ROADS BANKSHARES, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands, except share and per share data)
    
    Three Months Ended
    
    
    Nine Months Ended(unaudited)
    
    September 30, 2010
    
    
    September 30, 2009
    
    
    September 30, 2010
    
    
    September 30, 2009Interest Income:Loans, including fees
    
    $
    27,706
    
    
    $
    35,908
    
    
    $
    88,128
    
    
    $
    109,793Investment securities
    
    
    1,564
    
    
    
    1,453
    
    
    
    4,986
    
    
    
    4,794Overnight funds sold and due from Federal Reserve Bank
    
    
    225
    
    
    
    17
    
    
    
    501
    
    
    
    39Interest-bearing deposits in other banks
    
    
    1
    
    
    
    10
    
    
    
    1
    
    
    
    21Total interest income
    
    
    29,496
    
    
    
    37,388
    
    
    
    93,616
    
    
    
    114,647Interest Expense:Deposits:Demand
    
    
    2,373
    
    
    
    1,474
    
    
    
    10,039
    
    
    
    4,696Savings
    
    
    118
    
    
    
    229
    
    
    
    372
    
    
    
    951Time deposits:Less than $100
    
    
    3,547
    
    
    
    3,197
    
    
    
    11,190
    
    
    
    11,914$100 or more
    
    
    3,323
    
    
    
    3,560
    
    
    
    8,055
    
    
    
    10,280Interest on deposits
    
    
    9,361
    
    
    
    8,460
    
    
    
    29,656
    
    
    
    27,841Federal Home Loan Bank borrowings
    
    
    1,414
    
    
    
    1,622
    
    
    
    4,133
    
    
    
    5,003Other borrowings
    
    
    778
    
    
    
    789
    
    
    
    2,254
    
    
    
    2,974Overnight funds purchased
    
    
    
    
    
    
    40
    
    
    
    
    
    
    
    379Total interest expense
    
    
    11,553
    
    
    
    10,911
    
    
    
    36,043
    
    
    
    36,197Net interest income
    
    
    17,943
    
    
    
    26,477
    
    
    
    57,573
    
    
    
    78,450Provision for loan losses
    
    
    83,684
    
    
    
    33,662
    
    
    
    183,935
    
    
    
    68,557Net interest income (expense)
after provision for loan losses
    
    
    (65,741
    )
    
    
    (7,185
    )
    
    
    (126,362
    )
    
    
    9,893Noninterest Income:Service charges on deposit accounts
    
    
    1,609
    
    
    
    2,054
    
    
    
    5,029
    
    
    
    6,186Mortgage banking revenue
    
    
    4,262
    
    
    
    678
    
    
    
    8,621
    
    
    
    3,717Gain (loss) on sale of investment securities available for sale
    
    
    (1
    )
    
    
    2,695
    
    
    
    468
    
    
    
    2,695Gain on sale of premises and equipment
    
    
    117
    
    
    
    
    
    
    
    160
    
    
    
    Losses on foreclosed real estate and repossessed assets
    
    
    (2,914
    )
    
    
    (572
    )
    
    
    (6,128
    )
    
    
    (880
    )Other-than-temporary impairment of securities (includes total
other-than-temporary impairment losses of $67 and $490, net of $0 and $147 recognized in other comprehensive income for the nine
months
ended September 30, 2010 and 2009, respectively, before taxes)
    
    
    (23
    )
    
    
    (211
    )
    
    
    (67
    )
    
    
    (343
    )Insurance revenue
    
    
    1,054
    
    
    
    1,243
    
    
    
    3,653
    
    
    
    3,894Brokerage revenue
    
    
    61
    
    
    
    108
    
    
    
    214
    
    
    
    239Income from bank-owned life insurance
    
    
    440
    
    
    
    412
    
    
    
    1,264
    
    
    
    1,217Other
    
    
    1,350
    
    
    
    825
    
    
    
    3,673
    
    
    
    2,602Total noninterest income
    
    
    5,955
    
    
    
    7,232
    
    
    
    16,887
    
    
    
    19,327Noninterest Expense:Salaries and employee benefits
    
    
    12,591
    
    
    
    10,366
    
    
    
    33,296
    
    
    
    32,146Occupancy
    
    
    2,317
    
    
    
    2,232
    
    
    
    6,765
    
    
    
    6,316Data processing
    
    
    1,185
    
    
    
    1,472
    
    
    
    3,834
    
    
    
    3,965Impairment of goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,976FDIC insurance
    
    
    946
    
    
    
    1,328
    
    
    
    3,171
    
    
    
    4,629Equipment
    
    
    1,035
    
    
    
    1,215
    
    
    
    3,058
    
    
    
    3,706Other
    
    
    6,705
    
    
    
    5,093
    
    
    
    18,690
    
    
    
    13,146Total noninterest expense
    
    
    24,779
    
    
    
    21,706
    
    
    
    68,814
    
    
    
    91,884Loss before income tax benefit
    
    
    (84,565
    )
    
    
    (21,659
    )
    
    
    (178,289
    )
    
    
    (62,664
    )Income tax benefit
    
    
    (85
    )
    
    
    (8,282
    )
    
    
    (2,219
    )
    
    
    (13,425
    )Net loss
    
    
    (84,480
    )
    
    
    (13,377
    )
    
    
    (176,070
    )
    
    
    (49,239
    )Net income
attributable to noncontrolling interest
    
    
    413
    
    
    
    
    
    
    
    583
    
    
    
    Net loss
attributable to Hampton Roads Bankshares, Inc.
    
    
    (84,893
    )
    
    
    (13,377
    )
    
    
    (176,653
    )
    
    
    (49,239
    )Preferred stock dividend, accretion of discount
and conversion of preferred stock to common stock
    
    
    (114,912
    )
    
    
    1,360
    
    
    
    (112,114
    )
    
    
    7,319Net income (loss) available to common shareholders
    
    $
    30,019
    
    
    $
    (14,737
    )
    
    $
    (64,539
    )
    
    $
    (56,558
    )Per Common Share:Cash dividends declared
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    0.22Basic earnings (loss)
    
    $
    1.02
    
    
    $
    (0.68
    )
    
    $
    (2.63
    )
    
    $
    (2.60
    )Diluted earnings (loss)
    
    $
    1.02
    
    
    $
    (0.68
    )
    
    $
    (2.63
    )
    
    $
    (2.60
    )Basic weighted average shares outstanding
    
    
    29,350,815
    
    
    
    21,830,851
    
    
    
    24,546,337
    
    
    
    21,774,620Effect of
warrants
    
    
    192,233
    
    
    
    
    
    
    
    
    
    
    
    Diluted weighted average shares outstanding
    
    
    29,543,048
    
    
    
    21,830,851
    
    
    
    24,546,337
    
    
    
    21,774,620
 See accompanying notes to the consolidated financial statements.
 4




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##### Table of Contents



HAMPTON
ROADS BANKSHARES, INC.
 
 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
 AccumulatedOther
    
    
    Total(in thousands, except share data)
    
    Preferred Stock
    
    
    Common Stock
    
    
    
    
    
    
    Retained
    
    
    Noncontrolling
    
    
    Comprehensive
    
    
    Stockholders(unaudited)
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital Surplus
    
    
    Deficit
    
    
    Interest
    
    
    Gain (Loss)
    
    
    EquityBalance at December 31, 2009 (as restated)
    
    
    141,163
    
    
    $
    134,970
    
    
    
    22,154,320
    
    
    $
    13,846
    
    
    $
    165,391
    
    
    $
    (188,448
    )
    
    $
    
    
    
    $
    (746
    )
    
    $
    125,013Comprehensive loss:Net income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (176,653
    )
    
    
    583
    
    
    
    
    
    
    
    (176,070
    )Change in
unrealized gain on securities available for sale, net of taxes of $2,389
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,450
    
    
    
    4,450Reclassification
adjustment for securities gains included in net income, net of taxes of $(164)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (304
    )
    
    
    (304
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (172,507
    )Amortization of fair market value adjustment
    
    
    
    
    
    
    302
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (302
    )
    
    
    
    
    
    
    
    
    
    
    Preferred
stock dividend declared and amortization of preferred stock discount
    
    
    
    
    
    
    827
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    679
    
    
    
    
    
    
    
    
    
    
    
    1,506Stock
offering, net of issuance costs of $25,000
    
    
    
    
    
    
    
    
    
    
    587,500,050
    
    
    
    5,875
    
    
    
    204,125
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    210,000Conversion
of preferred stock to common stock
    
    
    (141,163
    )
    
    
    (136,099
    )
    
    
    75,031,550
    
    
    
    750
    
    
    
    23,612
    
    
    
    111,737
    
    
    
    
    
    
    
    
    
    
    
    Change par value from $0.625 to $0.01
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,621
    )
    
    
    13,621
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    120
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    120Forfeiture of non-vested stock
    
    
    
    
    
    
    
    
    
    
    (5,568
    )
    
    
    (3
    )
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6
    )Change in stock financed
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,000Distributed noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7
    )
    
    
    (159
    )
    
    
    
    
    
    
    (166
    )Balance at September 30, 2010
    
    
    
    
    
    $
    
    
    
    
    684,680,352
    
    
    $
    6,847
    
    
    $
    410,866
    
    
    $
    (252,994
    )
    
    $
    424
    
    
    $
    3,400
    
    
    $
    168,543
 See accompanying notes to the consolidated financial statements.
 5




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##### Table of Contents



HAMPTON
ROADS BANKSHARES, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands)
    
    Nine Months Ended(unaudited)
    
    September 30, 2010
    
    
    September 30, 2009Operating Activities:Net loss
    
    $
    (176,070
    )
    
    $
    (49,239
    )Adjustments
to reconcile net loss to net cash provided by (used in) operating activities:Depreciation and amortization
    
    
    3,856
    
    
    
    4,237Amortization of intangible assets and fair value adjustments
    
    
    (507
    )
    
    
    (4,402
    )Provision for loan losses
    
    
    183,935
    
    
    
    68,557Proceeds from mortgage loans held for sale
    
    
    279,156
    
    
    
    231,494Originations of mortgage loans held for sale
    
    
    (301,267
    )
    
    
    (237,393
    )Stock-based compensation expense
    
    
    120
    
    
    
    376Net amortization of premiums and accretion of discounts
on investment securities
    
    
    980
    
    
    
    (237
    )Gain on sale of premises and equipment
    
    
    (160
    )
    
    
    (7
    )Losses on foreclosed real estate and repossessed assets
    
    
    6,128
    
    
    
    989Gain on sale of investment securities available for sale
    
    
    (468
    )
    
    
    (2,695
    )Earnings on bank-owned life insurance
    
    
    (1,264
    )
    
    
    (1,217
    )Other-than-temporary impairment of securities
    
    
    67
    
    
    
    343Changes in deferred taxes
    
    
    (1,828
    )
    
    
    6,534Impairment of goodwill
    
    
    
    
    
    
    27,976Changes in:Interest receivable
    
    
    2,258
    
    
    
    1,200Other assets
    
    
    2,073
    
    
    
    (30,940
    )Interest payable
    
    
    158
    
    
    
    (1,570
    )Other liabilities
    
    
    14,835
    
    
    
    (3,842
    )Net cash provided by operating activities
    
    
    12,002
    
    
    
    10,164Investing Activities:Proceeds from maturities and calls of debt securities
available for sale
    
    
    18,070
    
    
    
    36,175Proceeds from sale of debt securities available for sale
    
    
    
    
    
    
    23,133Proceeds from sale of investment securities available for sale
    
    
    2,605
    
    
    
    Purchase of debt securities available for sale
    
    
    (22,612
    )
    
    
    (7,515
    )Purchase of (proceeds from) restricted equity securities
    
    
    (43
    )
    
    
    (11,782
    )Proceeds from sales of restricted equity securities
    
    
    8,444
    
    
    
    9,824Proceeds from the sale of loans
    
    
    
    
    
    
    697Net decrease in loans
    
    
    133,586
    
    
    
    64,439Purchase of premises and equipment
    
    
    (1,220
    )
    
    
    (2,837
    )Proceeds from sale of premises and equipment
    
    
    599
    
    
    
    178Proceeds from sale of repossessed assets
    
    
    5,883
    
    
    
    3,862Net cash provided by investing activities
    
    
    145,312
    
    
    
    116,174Financing Activities:Net increase in deposits
    
    
    98,851
    
    
    
    30,103Proceeds from Federal Home Loan Bank borrowings
    
    
    
    
    
    
    49,450Repayments of Federal Home Loan Bank borrowings
    
    
    (6,550
    )
    
    
    (71,500
    )Distributed noncontrolling interest
    
    
    (166
    )
    
    
    Net increase (decrease) in overnight funds borrowed
    
    
    
    
    
    
    (61,300
    )Net decrease in other borrowings
    
    
    
    
    
    
    (28,000
    )Common stock repurchased
    
    
    
    
    
    
    (545
    )Forfeiture of non-vested stock
    
    
    (6
    )
    
    
    Proceeds from issuance of common stock, net
    
    
    210,000
    
    
    
    Proceeds from exercise of stock options
    
    
    
    
    
    
    613Excess tax benefit realized from stock options exercised
    
    
    
    
    
    
    143Preferred stock dividends paid and
amortization of preferred stock discount
    
    
    1,506
    
    
    
    (7,319
    )Common stock dividends paid, net of reinvestment
    
    
    
    
    
    
    (4,261
    )Net cash provided by (used in) financing activities
    
    
    303,635
    
    
    
    (92,616
    )Increase in cash and cash equivalents
    
    
    460,949
    
    
    
    33,722Cash and cash equivalents at beginning of period
    
    
    200,044
    
    
    
    48,312Cash and cash equivalents at end of period
    
    $
    660,993
    
    
    $
    82,034
 6




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##### Table of Contents



HAMPTON
ROADS BANKSHARES, INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Nine Months EndedSeptember 30, 2010
    
    
    September 30, 2009Supplemental cash flow information:Cash paid for interest
    
    $
    35,885
    
    
    $
    37,767Cash paid for income taxes
    
    
    507
    
    
    
    13,714Supplemental non-cash information:Dividends reinvested
    
    $
    
    
    
    $
    531Change in unrealized gain (loss) on securities
    
    
    6,371
    
    
    
    (1,070
    )Transfer between loans and other real estate owned
    
    
    41,728
    
    
    
    7,767Unpaid stock
issuance costs included in other liabilities
    
    
    20,165
    
    
    
    
 See accompanying notes to the consolidated financial statements.
 7




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##### Table of Contents



HAMPTON
ROADS BANKSHARES, INC.
 PART I.
FINANCIAL INFORMATION
 
 Item 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE A  BASIS OF PRESENTATION
  Recent Accounting Pronouncements
 Accounting for Transfers of Financial Assets,
an amendment to SFAS No. 140
 Amendments to FASB Interpretation No. 46(R),
 Accounting for Own-Share Lending Arrangements in
Contemplation of Convertible Debt Issuance or Other Financing
 Accounting for Various Topics  Technical
Corrections to SEC Paragraphs
 Fair Value Measurements and Disclosures (Topic
820): Improving Disclosures about Fair Value Measurements
 8




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##### Table of Contents



HAMPTON
ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
Item 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Technical Corrections to Various Topics
 Subsequent Events (Topic 855): Amendments to
Certain Recognition and Disclosure Requirements
 Effect of a Loan Modification When the Loan Is Part
of a Pool That Is Accounted for as a Single Asset ReceivablesTroubled Debt Restructurings by Creditors
 Disclosures about the Credit Quality of Financing
Receivables and the Allowance for Credit Losses
 Plan AccountingDefined Contribution Pension
Plans
 NOTE B  RECAPITALIZATION PLAN
  9




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##### Table of Contents



HAMPTON ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
Item 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Number ofRegistered Name
    
    Shares IssuedCarlyle Financial Services Harbor, L.P.
    
    
    164,956,965ACMO-HR, L.L.C.
    
    
    153,020,190CapGen Capital Group VI, L.P.
    
    
    114,223,775M.H. Davidson & Co.
    
    
    1,561,302Davidson Kempner Partners
    
    
    10,869,716Davidson Kempner Institutional Partners, L.P.
    
    
    21,988,770David Kempner International, Ltd.
    
    
    25,336,954Davidson Kempner Distressed Opportunities International, Ltd
    
    
    5,797,326Davidson Kempner Distressed Opportunities Funds L.P.
    
    
    2,720,467Fire Tree Value Master Fund, L.P.
    
    
    45,193,824Fir Tree REOF II Master Fund, LLC
    
    
    23,080,711C12 Protium Value Opportunities Ltd.
    
    
    18,750,000Total Number of Shares
    
    
    587,500,000
      10




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##### Table of Contents



HAMPTON ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
Item 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     NOTE C  REGULATORY MATTERS AND GOING CONCERN CONSIDERATIONS
  Written Agreement
    11




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##### Table of Contents



HAMPTON ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
Item 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    Going Concern Considerations
  NOTE D  STOCK-BASED COMPENSATION
   12




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##### Table of Contents



HAMPTON
ROADS BANKSHARES, INC.
 PART I.
FINANCIAL INFORMATION
Item 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 September 30,2010
    
    
    2009Expense recognized:Related to stock options
    
    $
    88,506
    
    
    $
    135,918Related to share awards
    
    
    31,587
    
    
    
    240,100Related tax benefit
    
    
    28,791
    
    
    
    73,117Number of options exercised:New shares
    
    
    
    
    
    
    86,243Previously acquired shares
    
    
    
    
    
    
    Total intrinsic value of options exercised
    
    $
    
    
    
    $
    31,533Cash received from options exercised
    
    
    
    
    
    
    613,209
  Weighted
    
    
    AverageOptions
    
    
    Average
    
    
    IntrinsicOutstanding
    
    
    Exercise Price
    
    
    ValueBalance at December 31, 2009
    
    
    1,420,213
    
    
    $
    12.60
    
    
    $
    Granted
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    Expired
    
    
    (115,514
    )
    
    
    13.04
    
    
    
    Forfeited
    
    
    
    
    
    
    
    
    
    
    Balance at September 30, 2010
    
    
    1,304,699
    
    
    $
    12.56
    
    
    $
    Options exercisable at September 30, 2010
    
    
    1,215,909
    
    
    $
    12.36
    
    
    $
    
  Options Outstanding
    
    
    Options ExercisableWeightedRanges of
    
    
    
    
    
    Average RemainingExercise
    
    Number of Options
    
    
    Contractual
    
    
    Weighted Average
    
    
    Number of Options
    
    
    Weighted AveragePrices
    
    Outstanding
    
    
    Life
    
    
    Exercise Price
    
    
    Exercisable
    
    
    Exercise Price$3.09 - $5.05
    
    
    61,751
    
    
    
    1.72
    
    
    $
    4.13
    
    
    
    61,751
    
    
    $
    4.13$6.53 - $8.77
    
    
    297,086
    
    
    
    1.71
    
    
    
    8.02
    
    
    
    297,086
    
    
    
    8.02$9.11 -   $10.65
    
    
    379,990
    
    
    
    3.11
    
    
    
    9.77
    
    
    
    378,200
    
    
    
    9.77$12.00 - $12.49
    
    
    184,128
    
    
    
    6.32
    
    
    
    12.03
    
    
    
    126,195
    
    
    
    12.03$19.43 - $22.07
    
    
    343,051
    
    
    
    4.45
    
    
    
    20.02
    
    
    
    313,984
    
    
    
    19.86$23.67 - $24.67
    
    
    38,693
    
    
    
    4.74
    
    
    
    24.46
    
    
    
    38,693
    
    
    
    24.46$3.09 -   $24.67
    
    
    1,304,699
    
    
    
    3.58
    
    
    $
    12.56
    
    
    
    1,215,909
    
    
    $
    12.36
 13




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##### Table of Contents



HAMPTON
ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
Item 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   Per ShareWeighted-AverageNumber of
    
    
    Grant-DateShares
    
    
    Fair ValueBalance at December 31, 2009
    
    
    21,917
    
    
    $
    10.12Granted
    
    
    
    
    
    
    Vested
    
    
    (2,000
    )
    
    
    8.54Forfeited
    
    
    (4,592
    )
    
    
    8.60Balance at September 30, 2010
    
    
    15,325
    
    
    $
    10.79
  NOTE E  INVESTMENT SECURITIES
  September 30, 2010Amortized
    
    
    Gross Unrealized
    
    
    Gross Unrealized
    
    
    EstimatedDescription of Securities
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueAgency securities
    
    $
    14,026
    
    
    $
    517
    
    
    $
    
    
    
    $
    14,543Mortgage-backed securities
    
    
    147,435
    
    
    
    4,758
    
    
    
    34
    
    
    
    152,159Equity securities
    
    
    2,091
    
    
    
    49
    
    
    
    61
    
    
    
    2,079Total securities available for sale
    
    $
    163,552
    
    
    $
    5,324
    
    
    $
    95
    
    
    $
    168,781
 14




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##### Table of Contents



HAMPTON
ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
Item 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2009Amortized
    
    
    Gross Unrealized
    
    
    Gross Unrealized
    
    
    EstimatedDescription of Securities
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueAgency securities
    
    $
    11,376
    
    
    $
    173
    
    
    $
    105
    
    
    $
    11,444Mortgage-backed securities
    
    
    146,583
    
    
    
    482
    
    
    
    1,339
    
    
    
    145,726State and municipal securities
    
    
    1,279
    
    
    
    27
    
    
    
    
    
    
    
    1,306Equity securities
    
    
    2,966
    
    
    
    3
    
    
    
    383
    
    
    
    2,586Total securities available for sale
    
    $
    162,204
    
    
    $
    685
    
    
    $
    1,827
    
    
    $
    161,062
  September 30, 2010Amortized Cost
    
    
    Estimated Fair ValueDue after one year but less than five years
    
    
    94,766
    
    
    
    97,831Due after five years but less than ten years
    
    
    66,680
    
    
    
    68,854Due after ten years
    
    
    15
    
    
    
    17Equity securities
    
    
    2,091
    
    
    
    2,079Total available-for-sale securities
    
    $
    163,552
    
    
    $
    168,781
 December 31, 2009Amortized Cost
    
    
    Estimated Fair ValueDue in one year or less
    
    $
    1,005
    
    
    $
    1,025Due after one year but less than five years
    
    
    1,012
    
    
    
    1,089Due after five years but less than ten years
    
    
    9,569
    
    
    
    9,557Due after ten years
    
    
    147,652
    
    
    
    146,805Equity securities
    
    
    2,966
    
    
    
    2,586Total available-for-sale securities
    
    $
    162,204
    
    
    $
    161,062
  September 30, 2010Less than 12 Months
    
    
    12 Months or More
    
    
    TotalEstimated
    
    
    Unrealized
    
    
    Estimated
    
    
    Unrealized
    
    
    Estimated
    
    
    UnrealizedDescription of Securities
    
    Fair Value
    
    
    Loss
    
    
    Fair Value
    
    
    Loss
    
    
    Fair Value
    
    
    LossMortgage-backed securities
    
    $
    4,383
    
    
    $
    34
    
    
    $
    
    
    
    $
    
    
    
    $
    4,383
    
    
    $
    34Equity securities
    
    
    
    
    
    
    
    
    
    
    129
    
    
    
    61
    
    
    
    129
    
    
    
    61$
    4,383
    
    
    $
    34
    
    
    $
    129
    
    
    $
    61
    
    
    $
    4,512
    
    
    $
    95
 15




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##### Table of Contents



HAMPTON
ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
Item 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2009Less than 12 Months
    
    
    12 Months or More
    
    
    TotalEstimated
    
    
    Unrealized
    
    
    Estimated
    
    
    Unrealized
    
    
    Estimated
    
    
    UnrealizedDescription of Securities
    
    Fair Value
    
    
    Loss
    
    
    Fair Value
    
    
    Loss
    
    
    Fair Value
    
    
    LossAgency securities
    
    $
    4,711
    
    
    $
    105
    
    
    $
    
    
    
    $
    
    
    
    $
    4,711
    
    
    $
    105Mortgage-backed securities
    
    
    69,078
    
    
    
    1,339
    
    
    
    
    
    
    
    
    
    
    
    69,078
    
    
    
    1,339Equity securities
    
    
    32
    
    
    
    13
    
    
    
    1,097
    
    
    
    370
    
    
    
    1,129
    
    
    
    383$
    73,821
    
    
    $
    1,457
    
    
    $
    1,097
    
    
    $
    370
    
    
    $
    74,918
    
    
    $
    1,827
 Investment  Debt and Equity Securities
     16




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##### Table of Contents



HAMPTON
ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
Item 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2009
    
    $
    3,030Less: Realized gains for securities sales
    
    
    (2,352
    )Add: Loss where impairment was not
previously recognized
    
    
    52Add: Loss where impairment was
previously recognized
    
    
    15September 30, 2010
    
    $
    745
  NOTE F  ACCOUNTING FOR CERTAIN LOANS ACQUIRED IN A TRANSFER
 Loans and Debt Securities Acquired with Deteriorated Credit Quality
    17




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##### Table of Contents



HAMPTON
ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
Item 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 AccretableYieldBalance, December 31, 2009
    
    $
    1,042Accretion
    
    
    (399
    )Disposals
    
    
    (438
    )Additions
    
    
    130Balance, September 30, 2010
    
    $
    335
 NOTE G  LOANS
  September 30, 2010
    
    
    December 31, 2009Commercial
    
    $
    317,554
    
    
    $
    361,256Construction
    
    
    560,173
    
    
    
    757,702Real estate-commercial mortgage
    
    
    677,829
    
    
    
    740,570Real estate-residential mortgage
    
    
    511,201
    
    
    
    524,853Installment loans (to individuals)
    
    
    34,718
    
    
    
    42,858Deferred loan fees and related costs
    
    
    (390
    )
    
    
    (547
    )Total loans
    
    $
    2,101,085
    
    
    $
    2,426,692
   NOTE H  ALLOWANCE FOR LOAN LOSSES AND NON-PERFORMING ASSETS
   18




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##### Table of Contents



HAMPTON
ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
Item 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 2010
    
    
    2009Balance at beginning of period
    
    $
    132,697
    
    
    $
    51,218Provision for loan losses
    
    
    183,935
    
    
    
    68,557Loans charged off
    
    
    (157,634
    )
    
    
    (20,977
    )Recoveries
    
    
    4,255
    
    
    
    380Balance at end of period
    
    $
    163,253
    
    
    $
    99,178
  September 30, 2010
    
    
    December 31, 2009Loans 90 days past due and still accruing interest
    
    $
    
    
    
    $
    Nonaccrual loans
    
    
    326,910
    
    
    
    248,303Foreclosed real estate and repossessed assets
    
    
    38,584
    
    
    
    8,867Total non-performing assets
    
    $
    365,494
    
    
    $
    257,170
  September 30, 2010
    
    
    December 31, 2009Impaired loans for which an allowance has been
provided
    
    $
    309,936
    
    
    $
    331,532Impaired loans for which no allowance has been
provided
    
    
    122,530
    
    
    
    137,536Total impaired loans
    
    $
    432,466
    
    
    $
    469,068Allowance provided for impaired loans, included in the
allowance for loan losses
    
    $
    101,127
    
    
    $
    91,488Average balance in impaired loans
    
    $
    444,364
    
    
    $
    215,363Interest income recognized from impaired loans
    
    $
    4,673
    
    
    $
    17,440
  19




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##### Table of Contents



HAMPTON ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
Item 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Method Used to
    
    
    Impaired LoansLoan Category
    
    Measure Impairment
    
    
    September 30, 2010
    
    
    December 31, 20091-4 family residential construction
    
    Estimated fair market value
    
    $
    11,741
    
    
    $
    20,851Other construction and development
    
    Estimated fair market value
    
    
    229,795
    
    
    
    237,313Secured by farm land
    
    Estimated fair market value
    
    
    4,903
    
    
    
    1,318Secured by 1-4 family, revolving
    
    Estimated fair market value
    
    
    6,146
    
    
    
    6,018Secured by 1-4 family, 1st lien
    
    Estimated fair market value
    
    
    48,098
    
    
    
    32,532Secured by 1-4 family, junior lien
    
    Estimated fair market value
    
    
    2,128
    
    
    
    1,502Secured by multifamily
    
    Estimated fair market value
    
    
    8,374
    
    
    
    8,137Secured by nonfarm nonresidential
(owner occupied)
    
    Estimated fair market value
    
    
    27,802
    
    
    
    29,309Secured by nonfarm nonresidential
(non-owner occupied)
    
    Estimated fair market value
    
    
    66,460
    
    
    
    75,947Commercial and industrial
    
    Estimated fair market value
    
    
    25,853
    
    
    
    56,081Other consumer loans to individuals
    
    Estimated fair market value
    
    
    1,166
    
    
    
    60Total impaired loans
    
    
    
    $
    432,466
    
    
    $
    469,068
     20




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##### Table of Contents



HAMPTON
ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
Item 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE I  PREMISES AND EQUIPMENT
  September 30, 2010
    
    
    December 31, 2009Land
    
    $
    31,238
    
    
    $
    31,335Buildings and improvements
    
    
    58,128
    
    
    
    58,177Leasehold improvements
    
    
    3,418
    
    
    
    3,411Equipment, furniture, and fixtures
    
    
    14,150
    
    
    
    14,828Construction in process
    
    
    427
    
    
    
    7107,361
    
    
    
    107,758Less accumulated depreciation and
amortization
    
    
    (12,835
    )
    
    
    (10,246
    )Premises and equipment, net
    
    $
    94,526
    
    
    $
    97,512
 NOTE J  SUPPLEMENTAL RETIREMENT AGREEMENTS
  NOTE K  INTANGIBLE ASSETS
  September 30, 2010
    
    
    December 31, 2009Carrying
    
    
    Accumulated
    
    
    Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Amount
    
    
    AmortizationIntangible assets:Core deposit intangible
    
    $
    8,105
    
    
    $
    2,719
    
    
    $
    8,105
    
    
    $
    1,703Employment contract intangibles
    
    
    1,130
    
    
    
    860
    
    
    
    1,130
    
    
    
    713Insurance book of business intangible
    
    
    6,450
    
    
    
    753
    
    
    
    6,450
    
    
    
    430Total intangible assets
    
    $
    15,685
    
    
    $
    4,332
    
    
    $
    15,685
    
    
    $
    2,846
  NOTE L  FORECLOSED REAL ESTATE AND REPOSSESSED ASSETS
  21




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##### Table of Contents



HAMPTON
ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
Item 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2010
    
    
    September 30, 2009Balance at beginning of year
    
    $
    356
    
    
    $
    Provision for losses
    
    
    6,035
    
    
    
    880Charge-offs
    
    
    (1,470
    )
    
    
    (292
    )Balance at end of period
    
    $
    4,921
    
    
    $
    588
  Nine Months EndedSeptember 30, 2010
    
    
    September 30, 2009Expenses incurred for foreclosed assets
    
    $
    1,288
    
    
    $
    147Net loss on sales of real estate
    
    
    93
    
    
    
    35Provision for losses
    
    
    6,035
    
    
    
    880Total
    
    $
    7,416
    
    
    $
    1,062
 NOTE M  BUSINESS SEGMENT REPORTING
  Total
    
    
    Elimination
    
    
    Banking
    
    
    Mortgage
    
    
    Investment
    
    
    InsuranceTotal Assets at September 30, 2010
    
    $
    3,067,572
    
    
    $
    (331,282
    )
    
    $
    3,350,018
    
    
    $
    37,643
    
    
    $
    1,104
    
    
    $
    10,089Total Assets at December 31, 2009 (as
restated)
    
    $
    2,919,576
    
    
    $
    (303,100
    )
    
    $
    3,197,510
    
    
    $
    13,599
    
    
    $
    1,163
    
    
    $
    10,404Total
    
    
    Elimination
    
    
    Banking
    
    
    Mortgage
    
    
    Investment
    
    
    InsuranceThree Months Ended
September 30, 2010Net interest income
    
    $
    17,943
    
    
    $
    
    
    
    $
    17,848
    
    
    $
    90
    
    
    $
    
    
    
    $
    5Provision for loan losses
    
    
    83,684
    
    
    
    
    
    
    
    83,684
    
    
    
    
    
    
    
    
    
    
    
    Net interest income (loss) after
provision for loan losses
    
    
    (65,741
    )
    
    
    
    
    
    
    (65,836
    )
    
    
    90
    
    
    
    
    
    
    
    5Noninterest income
    
    
    5,955
    
    
    
    
    
    
    
    580
    
    
    
    4,267
    
    
    
    30
    
    
    
    1,078Noninterest expense
    
    
    24,779
    
    
    
    
    
    
    
    20,883
    
    
    
    2,641
    
    
    
    31
    
    
    
    1,224Net income
(loss) before income taxes (benefit)
    
    
    (84,565
    )
    
    
    
    
    
    
    (86,139
    )
    
    
    1,716
    
    
    
    (1
    )
    
    
    (141
    )Income tax expense (benefit)
    
    
    (85
    )
    
    
    
    
    
    
    (636
    )
    
    
    600
    
    
    
    
    
    
    
    (49
    )Net income (loss) before noncontrolling
interest
    
    
    (84,480
    )
    
    
    
    
    
    
    (85,503
    )
    
    
    1,116
    
    
    
    (1
    )
    
    
    (92
    )Noncontrolling interest
    
    
    (413
    )
    
    
    
    
    
    
    
    
    
    
    (413
    )
    
    
    
    
    
    
    Net income (loss)
    
    $
    (84,893
    )
    
    $
    
    
    
    $
    (85,503
    )
    
    $
    703
    
    
    $
    (1
    )
    
    $
    (92
    )
 22




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##### Table of Contents



HAMPTON
ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
Item 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Total
    
    
    Elimination
    
    
    Banking
    
    
    Mortgage
    
    
    Investment
    
    
    InsuranceThree Months Ended
September 30, 2009Net interest income
    
    $
    26,477
    
    
    $
    
    
    
    $
    26,367
    
    
    $
    106
    
    
    $
    
    
    
    $
    4Provision for loan losses
    
    
    33,662
    
    
    
    
    
    
    
    33,662
    
    
    
    
    
    
    
    
    
    
    
    Net interest income (loss) after
provision for loan losses
    
    
    (7,185
    )
    
    
    
    
    
    
    (7,295
    )
    
    
    106
    
    
    
    
    
    
    
    4Noninterest income
    
    
    7,232
    
    
    
    
    
    
    
    5,239
    
    
    
    678
    
    
    
    72
    
    
    
    1,243Noninterest expense
    
    
    21,706
    
    
    
    
    
    
    
    19,730
    
    
    
    798
    
    
    
    39
    
    
    
    1,139Net income (loss) before income
taxes (benefit)
    
    
    (21,659
    )
    
    
    
    
    
    
    (21,786
    )
    
    
    (14
    )
    
    
    33
    
    
    
    108Income tax expense (benefit)
    
    
    (8,282
    )
    
    
    
    
    
    
    (8,326
    )
    
    
    (5
    )
    
    
    12
    
    
    
    37Net income (loss)
    
    $
    (13,377
    )
    
    $
    
    
    
    $
    (13,460
    )
    
    $
    (9
    )
    
    $
    21
    
    
    $
    71Total
    
    
    Elimination
    
    
    Banking
    
    
    Mortgage
    
    
    Investment
    
    
    InsuranceNine Months Ended
September 30, 2010Net interest income
    
    $
    57,573
    
    
    $
    
    
    
    $
    57,277
    
    
    $
    284
    
    
    $
    
    
    
    $
    12Provision for loan losses
    
    
    183,935
    
    
    
    
    
    
    
    183,935
    
    
    
    
    
    
    
    
    
    
    
    Net interest income (loss) after
provision for loan losses
    
    
    (126,362
    )
    
    
    
    
    
    
    (126,658
    )
    
    
    284
    
    
    
    
    
    
    
    12Noninterest income
    
    
    16,887
    
    
    
    
    
    
    
    4,478
    
    
    
    8,626
    
    
    
    106
    
    
    
    3,677Noninterest expense
    
    
    68,814
    
    
    
    
    
    
    
    59,501
    
    
    
    5,712
    
    
    
    125
    
    
    
    3,476Net income (loss) before income taxes (benefit)
    
    
    (178,289
    )
    
    
    
    
    
    
    (181,681
    )
    
    
    3,198
    
    
    
    (19
    )
    
    
    213Income tax expense (benefit)
    
    
    (2,219
    )
    
    
    
    
    
    
    (3,406
    )
    
    
    1,119
    
    
    
    (7
    )
    
    
    75Net income (loss) before noncontrolling
interest
    
    
    (176,070
    )
    
    
    
    
    
    
    (178,275
    )
    
    
    2,079
    
    
    
    (12
    )
    
    
    138Noncontrolling interest
    
    
    (583
    )
    
    
    
    
    
    
    
    
    
    
    (583
    )
    
    
    
    
    
    
    Net income (loss)
    
    $
    (176,653
    )
    
    $
    
    
    
    $
    (178,275
    )
    
    $
    1,496
    
    
    $
    (12
    )
    
    $
    138Total
    
    
    Elimination
    
    
    Banking
    
    
    Mortgage
    
    
    Investment
    
    
    InsuranceNine Months Ended
September 30, 2009Net interest income
    
    $
    78,450
    
        $
    
    
    
    $
    78,144
    
    
    $
    294
    
    
    $
    
    
    
    $
    12Provision for loan losses
    
    
    68,557
    
    
    
    
    
    
    
    68,557
    
    
    
    
    
    
    
    
    
    
    
    Net interest income after
provision for loan losses
    
    
    9,893
    
    
    
    
    
    
    
    9,587
    
    
    
    294
    
    
    
    
    
    
    
    12Noninterest income
    
    
    19,327
    
    
    
    
    
    
    
    11,590
    
    
    
    3,678
    
    
    
    165
    
    
    
    3,894Noninterest expense
    
    
    91,884
    
    
    
    
    
    
    
    85,419
    
    
    
    2,843
    
    
    
    114
    
    
    
    3,508Net income (loss) before
income taxes (benefit)
    
    
    (62,664
    )
    
    
    
    
    
    
    (64,242
    )
    
    
    1,129
    
    
    
    51
    
    
    
    398Income tax expense (benefit)
    
    
    (13,425
    )
    
    
    
    
    
    
    (13,977
    )
    
    
    395
    
    
    
    18
    
    
    
    139Net income (loss)
    
    $
    (49,239
    )
    

    $
    
    
    
    $
    (50,265
    )
    
    $
    734
    
    
    $
    33
    
    
    $
    259
 NOTE N  FAIR VALUE MEASUREMENTS
 Fair Value Measurements and Disclosures
  23




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##### Table of Contents



HAMPTON
ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
Item 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Level 1
    
    Quoted prices in active markets for identical assets or
liabilities. Level 1 assets and liabilities include debt and
equity securities and derivative contracts that are traded in an
active exchange market, as well as certain U.S. Treasury
securities that are highly liquid and are actively traded in
over-the-counter markets.Level 2
    
    Observable inputs other than Level 1 prices, such as quoted prices
for similar assets or liabilities, quoted prices in markets that
are not active, or other inputs that are observable or can be
corroborated by observable market data for substantially the full
term of the assets or liabilities. Level 2 assets and liabilities
include debt securities with quoted prices that are traded less
frequently than exchange-traded instruments and derivative
contracts whose values are determined using a pricing model with
inputs that are observable in the market or can be derived
principally from or corroborated by observable market data.Level 3
    
    Unobservable inputs that are supported by little or no market
activity and that are significant to the fair value of the assets
or liabilities. Level 3 assets and liabilities include financial
instruments whose value is determined using pricing models,
discounted cash flow methodologies, or similar techniques as well
as instruments for which the determination of fair value requires
significant management judgment or estimation.
 Recurring Basis
  Fair Value Measurements atSeptember 30, 2010 UsingQuoted Prices
    
    
    Significant Other
    
    
    SignificantAssets / Liabilities
    
    
    in Active Markets
    
    
    Observable
    
    
    UnobservableMeasured at
    
    
    for Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    Fair Value
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Investment securities available for sale:Agency securities
    
    $
    14,543
    
    
    $
    
    
    
    $
    14,543
    
    
    $
    Mortgage-backed securities
    
    
    152,159
    
    
    
    
    
    
    
    152,159
    
    
    
    Equity securities
    
    
    2,079
    
    
    
    661
    
    
    
    
    
    
    
    1,418Total investment securities available
for sale
    
    
    168,781
    
    
    
    661
    
    
    
    166,702
    
    
    
    1,418Derivative loan commitments
    
    
    1,663
    
    
    
    
    
    
    
    
    
    
    
    1,663Loans held for sale
    
    
    34,726
    
    
    
    
    
    
    
    34,726
    
    
    
    
 24




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##### Table of Contents



HAMPTON
ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
Item 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Fair Value Measurements atDecember 31, 2009 UsingQuoted Prices
    
    
    Significant Other
    
    
    SignificantAssets / Liabilities
    
    
    in Active Markets
    
    
    Observable
    
    
    UnobservableMeasured at
    
    
    for Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    Fair Value
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Investment securities available for sale:Agency securities
    
    $
    11,444
    
    
    $
    
    
    
    $
    11,444
    
    
    $
    Mortgage-backed securities
    
    
    145,726
    
    
    
    
    
    
    
    145,726
    
    
    
    State and municipal securities
    
    
    1,306
    
    
    
    
    
    
    
    1,306
    
    
    
    Equity securities
    
    
    2,586
    
    
    
    1,358
    
    
    
    
    
    
    
    1,228Total investment securities available
for sale
    
    
    161,062
    
    
    
    1,358
    
    
    
    158,476
    
    
    
    1,228Derivative loan commitments
    
    
    201
    
    
    
    
    
    
    
    
    
    
    
    201Loans held for sale
    
    
    12,615
    
    
    
    
    
    
    
    12,615
    
    
    
    
 Activity in Fair Value MeasurementsNine Months Ended September 30, 2010Derivative
    
    
    LoansLoan
    
    
    HeldInvestment Securities Available for Sale
    
    
    Commitments
    
    
    for SaleDescription
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Level 3
    
    
    Level 2Balance, December 31, 2009
    
    $
    1,358
    
    
    $
    158,476
    
    
    $
    1,228
    
    
    $
    201
    
    
    $
    12,615Unrealized (gains) losses included in:Earnings
    
    
    (67
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other comprehensive gain (loss)
    
    
    207
    
    
    
    4,981
    
    
    
    190
    
    
    
    
    
    
    
    Purchases, issuances, and
settlements, net
    
    
    (837
    )
    
    
    3,245
    
    
    
    
    
    
    
    1,462
    
    
    
    22,111Transfers in and/or out, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance, September 30, 2010
    
    $
    661
    
    
    $
    166,702
    
    
    $
    1,418
    
    
    $
    1,663
    
    
    $
    34,726
  Investment Securities Available for Sale
 Derivative Loan Commitments
 Loans Held For Sale
 25




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##### Table of Contents



HAMPTON
ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
Item 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Non-recurring Basis
   Assets / Liabilities
    
    
    Fair Value Measurements atMeasured at
    
    
    September 30, 2010 UsingDescription
    
    Fair Value
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Total LossesImpaired loans
    
    $
    208,809
    
    
    $
    
    
    
    $
    131,038
    
    
    $
    77,771
    
    
    $
    
 Assets / Liabilities
    
    
    Fair Value Measurements atMeasured at
    
    
    December 31, 2009 Using
    
    
    TotalDescription
    
    Fair Value
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    LossesImpaired loans
    
    $
    240,044
    
    
    $
    
    
    
    $
    149,346
    
    
    $
    90,698
    
    
    $
    
  26




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##### Table of Contents



HAMPTON
ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
Item 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Assets / Liabilities
    
    
    Fair Value Measurements atMeasured at
    
    
    September 30, 2010 Using
    
    
    TotalDescription
    
    Fair Value
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    LossesForeclosed real estate and repossessed assets
    
    $
    38,584
    
    
    $
    
    
    
    $
    38,377
    
    
    $
    207
    
    
    $
    6,128
 Assets / Liabilities
    
    
    Fair Value Measurements atMeasured at
    
    
    December 31, 2009 Using
    
    
    TotalDescription
    
    Fair Value
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    LossesForeclosed real estate and repossessed assets
    
    $
    8,867
    
    
    $
    
    
    
    $
    8,867
    
    
    $
    
    
    
    $
    1,043Goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    84,837
  Foreclosed Real Estate and Repossessed Assets
 Goodwill
  (a)
    
    Cash and Cash EquivalentsCash and cash equivalents include cash and due from banks, overnight funds sold and due
from FRB, and interest-bearing deposits in other banks. The carrying amount approximates
fair value.(b)
    
    Investment Securities Available for SaleFair values are based on published market prices where available. If quoted market prices
are not available, then fair values are estimated by using pricing models, quoted prices
of securities with similar characteristics, or discounted cash flow. Investment
securities available for sale are carried at their aggregate fair value.(c)
    
    Loans Held for SaleThe carrying value of loans held for sale is a reasonable estimate of fair value since
loans are expected to be sold within a short period.(d)
    
    LoansThe fair value of other loans is estimated by discounting the future cash flows using
interest rates currently being offered for loans with similar terms to borrowers of
similar credit quality.
 27




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##### Table of Contents



HAMPTON
ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
Item 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (e)
    
    Interest Receivable and Interest PayableThe carrying amount approximates fair value.(f)
    
    Bank-Owned Life InsuranceThe carrying amount approximates fair value.(g)
    
    DepositsThe fair values disclosed for demand deposits (for example, interest and noninterest
demand and savings accounts) are, by definition, equal to the amount payable on demand at
the reporting date (this is, their carrying values). The carrying amounts of
variable-rate, fixed-term money market accounts and certificates of deposit approximate
their fair values at the reporting date. Fair values for fixed-rate certificates of
deposit are estimated using a discounted cash flow calculation that applies market
interest rates on comparable instruments to a schedule of aggregated expected monthly
maturities on time deposits.(h)
    
    BorrowingsThe fair value of borrowings is estimated using discounted cash flow analysis based on the
interest rates currently offered for borrowings of similar remaining maturities and
collateral requirements. These include other borrowings, overnight funds purchased, and
FHLB borrowings.(i)
    
    Commitments to Extend Credit and Standby Letters of CreditThe only amounts recorded for commitments to extend credit and standby letters of credit
are the deferred fees arising from these unrecognized financial instruments. These
deferred fees are not deemed significant at September 30, 2010 and December 31, 2009, and
as such, the related fair values have not been estimated.
 Financial Instruments,
 September 30, 2010
    
    
    December 31, 2009Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairValue
    
    
    Value
    
    
    Value
    
    
    ValueAssets:Cash and due from banks
    
    $
    19,198
    
    
    $
    19,198
    
    
    $
    16,995
    
    
    $
    16,995Interest-bearing deposits in other banks
    
    
    1,268
    
    
    
    1,268
    
    
    
    43,821
    
    
    
    43,821Overnight funds sold and due from FRB
    
    
    640,527
    
    
    
    640,527
    
    
    
    139,228
    
    
    
    139,228Investment securities available for sale
    
    
    168,781
    
    
    
    168,781
    
    
    
    161,062
    
    
    
    161,062Loans held for sale
    
    
    34,726
    
    
    
    34,726
    
    
    
    12,615
    
    
    
    12,615Loans, net
    
    
    1,937,832
    
    
    
    2,003,088
    
    
    
    2,293,995
    
    
    
    2,364,702Interest receivable
    
    
    6,530
    
    
    
    6,530
    
    
    
    8,788
    
    
    
    8,788Bank-owned life insurance
    
    
    49,619
    
    
    
    49,619
    
    
    
    48,354
    
    
    
    48,354Liabilities:Deposits
    
    
    2,593,110
    
    
    
    2,647,014
    
    
    
    2,495,040
    
    
    
    2,486,449FHLB borrowings
    
    
    219,169
    
    
    
    231,820
    
    
    
    228,215
    
    
    
    233,356Other borrowings
    
    
    49,703
    
    
    
    51,501
    
    
    
    49,254
    
    
    
    50,316Interest payable
    
    
    3,731
    
    
    
    3,731
    
    
    
    3,573
    
    
    
    3,573
 28




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##### Table of Contents



HAMPTON
ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
Item 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE O
 TROUBLED ASSET RELIEF PROGRAM (TARP)
      29




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##### Table of Contents



HAMPTON
ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
Item 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  NOTE P
 NONINTEREST EXPENSE
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(in thousands)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Salaries and employee benefits
    
    $
    12,591
    
    
    $
    10,366
    
    
    $
    33,296
    
    
    $
    32,146Occupancy
    
    
    2,317
    
    
    
    2,232
    
    
    
    6,765
    
    
    
    6,316Data processing
    
    
    1,185
    
    
    
    1,472
    
    
    
    3,834
    
    
    
    3,965Impairment of goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,976FDIC insurance
    
    
    946
    
    
    
    1,328
    
    
    
    3,171
    
    
    
    4,629Equipment
    
    
    1,035
    
    
    
    1,215
    
    
    
    3,058
    
    
    
    3,706Professional fees
    
    
    1,812
    
    
    
    167
    
    
    
    4,355
    
    
    
    505Problem loan and repossessed
asset costs
    
    
    1,028
    
    
    
    82
    
    
    
    3,031
    
    
    
    242Amortization of intangible assets
    
    
    549
    
    
    
    646
    
    
    
    1,486
    
    
    
    1,727Bank franchise tax
    
    
    538
    
    
    
    177
    
    
    
    1,487
    
    
    
    532Telephone and postage
    
    
    455
    
    
    
    332
    
    
    
    1,258
    
    
    
    1,168Stationery, printing, and office
supplies
    
    
    276
    
    
    
    386
    
    
    
    663
    
    
    
    745Directors and regional board fees
    
    
    179
    
    
    
    184
    
    
    
    539
    
    
    
    849Advertising and marketing
    
    
    163
    
    
    
    186
    
    
    
    549
    
    
    
    377Other
    
    
    1,705
    
    
    
    2,933
    
    
    
    5,322
    
    
    
    7,001Total noninterest expense
    
    $
    24,779
    
    
    $
    21,706
    
    
    $
    68,814
    
    
    $
    91,884
 NOTE Q
 SUBSEQUENT EVENTS
  30




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##### Table of Contents



HAMPTON
ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
 
 Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS
 Forward-Looking Statements
    
    
    We incurred significant losses in 2009 and through the third quarter of 2010 and may
continue to do so in the future, and we can make no assurances as to when we will be
profitable;
    
    We may need to raise additional capital that may not be available to us;
    
    The Company has restated its financial statements, which may have a future adverse
effect;
    
    BOHR is restricted from accepting new brokered deposits, and an inability to maintain our
regulatory capital position could adversely affect our operations;
    
    The Company has received a grand jury subpoena from the
United States Department of Justice, Criminal Division
(DOJ) and, although the Company is not a target, there
can be no assurances as to the timing or eventual outcome of the
related investigation;
    
    Current and future increases in Federal Deposit Insurance Corporation (FDIC)
insurance premiums, including the FDIC special assessment imposed on all FDIC-insured
institutions, will decrease our earnings. In addition, FDIC insurance assessments will
likely increase from the prior inability to maintain a well- capitalized status, which
would further decrease earnings;
    
    We have entered into a written agreement with the Federal Reserve Bank of Richmond and
the Virginia Bureau of Financial Institutions, which requires us to designate a
significant amount of resources to complying with the agreement and may have a material
adverse effect on our operations and the value of our securities;
    
    Our estimate for losses in our loan portfolio may be inadequate, which would cause our
results of operations and financial condition to be adversely affected;
    
    We have had and may continue to have large numbers of problem loans and difficulties
with our loan administration, which could increase our losses related to loans;
    
    If we fail to meet the continued listing requirements of the NASDAQ Global Select
Market, our Common Stock could be delisted;
    
    Governmental regulation and regulatory actions against us may impair our operations or
restrict our growth;
    
    If the value of real estate in the markets we serve were to further decline
materially, a significant portion of our loan portfolio could become further
under-collateralized, which could have a material adverse effect on us;
    
    Our commercial real estate and equity line lending may expose us to a greater risk of
loss and hurt our earnings and profitability;
    
    A significant amount of our loan portfolio contains loans used to finance construction
and land development and these types of loans subject our loan portfolio to a higher
degree of credit risk;
    
    Our lending on vacant land may expose us to a greater risk of loss and may have an
adverse effect on results of operations;
    
    Difficult market conditions have adversely affected our industry;
 31




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HAMPTON
ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS
 
    
    Our ability to maintain adequate sources of funding may be negatively impacted by the
current economic environment which may, among other things, impact our future ability to
pay dividends or satisfy our obligations;
    
    Our ability to maintain adequate sources of liquidity may be negatively impacted by
the current economic environment which may, amount other things, impact our ability to
pay dividends or satisfy our obligations;
    
    The current economic environment may negatively impact our ability to maintain
required capital levels or otherwise negatively impact our financial condition, which
may, among other things, limit access to certain sources of funding and liquidity;
    
    We may face increasing deposit-pricing pressures, which may, among other things,
reduce our profitability;
    
    We may continue to incur losses if we are unable to successfully manage interest rate
risk;
    
    Our future success is dependent on our ability to compete effectively in the highly
competitive banking industry;
    
    Our operations and customers might be affected by the occurrence of a natural disaster
or other catastrophic event in our market area;
    
    We face a variety of threats from technology based frauds and scams;
    
    Virginia law and the provisions of our Articles of Incorporation and Bylaws could
deter or prevent takeover attempts by a potential purchaser of our Common Stock that
would be willing to pay you a premium for your shares of our Common Stock;
    
    Because we will issue additional shares of Common Stock, existing shareholders could
be subject to substantial dilution;
    
    The market for our Common Stock historically has experienced significant price and
volume fluctuations;
    
    We are not paying dividends on our Common Stock and currently are prevented from doing
so. The failure to resume paying dividends on our Common Stock may adversely affect us;
    
    Our business, financial condition, and results of operations are highly regulated and
could be adversely affected by new or changed regulations and by the manner in which such
regulations are applied by regulatory authorities;
    
    Banking regulators have broad enforcement power, but regulations are meant to protect
depositors and not investors;
    
    The fiscal, monetary, and regulatory policies of the Federal Government and its
agencies could have a material adverse effect on our results of operations;
    
    The recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act (the
Dodd-Frank Act) may adversely affect our business, financial condition, and results of
operations; and
    
    The soundness of other financial institutions could adversely affect us.
  Overview
  32




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HAMPTON
ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS
    
    
    Assets were $3.1 billion. They increased by $148.0 million or 5% for the
first nine months of 2010 from December 31, 2009. This was primarily the result of an
increase in overnight funds sold and due from Federal Reserve Bank of 4% offset by a
13% decrease in loans during that period.
    
    Investment securities available for sale increased $7.7 million to $168.8
million for the first nine months of 2010. Investments purchased during 2010 were
low-risk weighted mortgage-backed  and agency securities.
    
    Loans decreased by $325.6 million or 13% for the nine months ended
September 30, 2010 as loan paydowns and charge-offs exceeded the volume of new
originations. New loan activity continues to be low as a result of our tighter
underwriting criteria and economic conditions.
    
    Deposits increased $98.1 million or 4% as new customer deposit activity
including national rate board deposits more than offset the decline in brokered
deposits.
    
    During the quarter ended September 30, 2010, the Company completed a stock
offering in which 587,500,000 new shares of Common Stock were issued at $0.40 per share
for an infusion of $210.0 million of capital net of $25.0 million in issuance costs.
In connection with this capital raise, existing preferred stock was converted to Common
Stock creating income to common shareholders of $111.7 million.
    
    Net income available to common shareholders for the three months ended
September 30, 2010 was $30.0 million or $1.02 per common diluted share, and net loss
available to common shareholders for the nine months ended
September 30, 2010 was $64.5
million or $2.63 per common diluted share, respectively, as compared with net loss
available to common shareholders of $14.7 million or $0.68 per common diluted share and
$56.6 million or $2.60 per common diluted share for the three and nine months,
respectively, ended September 30, 2009.
    
    The net loss of $176.7 million for the nine months ended September 30, 2010
was primarily attributable to provision for loan losses expense of $183.9 million.
    
    Net interest income decreased $8.5 million and $20.9 million for the three
and nine months, respectively, ended September 30, 2010 as
compared to the same period in
2009. This was primarily the result of the decrease in interest income from loans.
 33




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HAMPTON
ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS
 
    
    Noninterest income for the three and nine months ended September 30, 2010
was $6.0 million and $16.9 million, respectively, an 18% and 13% decrease over the
comparative periods in 2009. An increase in mortgage banking revenue partially offset
the increased losses on foreclosed assets.
    
    Noninterest expense was $24.8 million and $68.8 million for the three and
nine months, respectively, ended September 30, 2010, which was an increase of $3.1
million or 14% and a decrease of $23.1 million or 25% over the comparable periods for
2009.
 Critical Accounting Policies
  Material
Trends and Uncertainties
     Analysis of Financial Condition
 Cash and Cash Equivalents .
 Securities.
 34




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HAMPTON
ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS
   Loan Portfolio
   Allowance for Loan Losses.
 35




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HAMPTON
ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS
   September 30,
    
    
    December 31,2010
    
    
    2009Allowance for loan losses:Pooled component
    
    $
    53,057
    
    
    $
    34,050Specific component
    
    
    101,127
    
    
    
    91,488Unallocated component
    
    
    9,069
    
    
    
    7,159Total
    
    $
    163,253
    
    
    $
    132,697Impaired loans
    
    $
    432,466
    
    
    $
    469,068Non-impaired loans
    
    
    1,668,619
    
    
    
    1,957,624Total loans
    
    $
    2,101,085
    
    
    $
    2,426,692Pooled component as % of
non-impaired loans
    
    
    3.18
    %
    
    
    1.74
    %Specific component as % of
impaired loans
    
    
    23.38
    %
    
    
    19.50
    %Allowance as a % of loans
    
    
    7.77
    %
    
    
    5.47
    %Allowance as a % of nonaccrual loans
    
    
    49.94
    %
    
    
    53.44
    %
  36




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##### Table of Contents



HAMPTON
ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS
 September 30, 2010
    
    
    December 31, 2009Non-performing loans for which full loss
has been charged off to total loans
    
    
    3.17
    %
    
    
    0.91
    %Non-performing loans for which full loss
has been charged off to non-performing
loans
    
    
    20.35
    %
    
    
    8.91
    %Charge off rate for nonperforming loans
which the full loss has been charged off
    
    
    52.32
    %
    
    
    42.46
    %Coverage ratio net of nonperforming loans
for which the full loss has been charged off
    
    
    62.69
    %
    
    
    58.67
    %Total allowance divided by total loans less
nonperforming loans for which the full loss
has been charged off
    
    
    8.02
    %
    
    
    5.52
    %Allowance for individually impaired loans
divided by impaired loans for which an
allowance has been provided
    
    
    32.63
    %
    
    
    27.60
    %
  Non-Performing Loans.
  September 30, 2010
    
    
    December 31, 2009Commercial
    
    $
    24,860
    
    
    $
    24,803Construction
    
    
    199,042
    
    
    
    150,325Real estate  commercial mortgage
    
    
    66,387
    
    
    
    50,858Real estate  residential mortgage
    
    
    35,842
    
    
    
    22,146Installment loans (to individuals)
    
    
    779
    
    
    
    171Total nonaccrual loans
    
    $
    326,910
    
    
    $
    248,303
 Deposits.
 37




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##### Table of Contents



HAMPTON
ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS
   Borrowings.
 Capital Resources.
   Amount
    
    
    Interest
    
    
    Redeemable
    
    
    Mandatory(in thousands)
    
    
    Rate
    
    
    On Or After
    
    
    RedemptionGateway Capital Statutory Trust I
    
    $
    8,000
    
    
    LIBOR + 3.10%
    
    September 17, 2008
    
    September 17, 2033Gateway Capital Statutory Trust II
    
    
    7,000
    
    
    LIBOR + 2.65%
    
    July 17, 2009
    
    June 17, 2034Gateway Capital Statutory Trust III
    
    
    15,000
    
    
    LIBOR + 1.50%
    
    May 30, 2011
    
    May 30, 2036Gateway Capital Statutory Trust IV
    
    
    25,000
    
    
    LIBOR + 1.55%
    
    July 30, 2012
    
    July 30, 2037
   38




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##### Table of Contents



HAMPTON
ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS
       Off-Balance Sheet Arrangements Financial Instruments with
Off-Balance-Sheet Risk
 Contractual Obligations.
 Analysis of Results of Operations
 Overview.
 39




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##### Table of Contents



HAMPTON
ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS
  Net Interest Income .
   40




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HAMPTON
ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS
   Three Months Ended
    
    
    Three Months EndedSeptember 30, 2010
    
    
    September 30, 2009
    
    
    2010 Compared to 2009Annualized
    
    
    
    
    
    
    
    
    
    
    Annualized
    
    
    
    
    
    
    InterestInterest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    Average
    
    
    Income/
    
    
    VarianceAverage
    
    
    Income/
    
    
    Yield/
    
    
    Average
    
    
    Income/
    
    
    Yield/
    
    
    Expense
    
    
    Attributable to(in thousands)
    
    Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate
    
    
    Variance
    
    
    Rate
    
    
    VolumeAssets:Interest-earning assetsLoans
    
    $
    1,879,696
    
    
    $
    109,920
    
    
    
    5.85
    %
    
    $
    2,557,046
    
    
    $
    142,461
    
    
    
    5.57
    %
    
    $
    (32,541
    )
    
    $
    6,816
    
    
    $
    (39,357
    )Investment securities
    
    
    197,719
    
    
    
    6,204
    
    
    
    3.14
    %
    
    
    148,518
    
    
    
    5,761
    
    
    
    3.88
    %
    
    
    443
    
    
    
    (1,234
    )
    
    
    1,677Interest-bearing deposits in other banks
    
    
    68,964
    
    
    
    162
    
    
    
    0.23
    %
    
    
    12,050
    
    
    
    40
    
    
    
    0.33
    %
    
    
    122
    
    
    
    (14
    )
    
    
    136Overnight funds sold and due from FRB
    
    
    307,463
    
    
    
    736
    
    
    
    0.24
    %
    
    
    48,084
    
    
    
    67
    
    
    
    0.14
    %
    
    
    669
    
    
    
    76
    
    
    
    593Total interest-earning assets
    
    
    2,453,842
    
    
    
    117,022
    
    
    
    4.77
    %
    
    
    2,765,698
    
    
    
    148,329
    
    
    
    5.36
    %
    
    
    (31,307
    )
    
    
    5,644
    
    
    
    (36,951
    )Noninterest-earning assets
    
    
    444,642
    
    
    
    
    
    
    
    
    
    
    
    214,243Total assets
    
    
    2,898,484
    
    
    
    
    
    
    
    
    
    
    
    2,979,941Liabilities and Shareholders Equity:Interest-bearing liabilitiesInterest-bearing demand deposits
    
    
    791,313
    
    
    
    9,415
    
    
    
    1.19
    %
    
    
    609,497
    
    
    
    5,848
    
    
    
    0.96
    %
    
    
    3,567
    
    
    
    1,590
    
    
    
    1,977Savings deposits
    
    
    74,480
    
    
    
    467
    
    
    
    0.63
    %
    
    
    110,196
    
    
    
    908
    
    
    
    0.83
    %
    
    
    (441
    )
    
    
    (187
    )
    
    
    (254
    )Time deposits
    
    
    1,459,547
    
    
    
    27,257
    
    
    
    1.87
    %
    
    
    1,349,920
    
    
    
    26,808
    
    
    
    1.99
    %
    
    
    449
    
    
    
    (1,653
    )
    
    
    2,102Total interest-bearing deposits
    
    
    2,325,340
    
    
    
    37,139
    
    
    
    1.60
    %
    
    
    2,069,613
    
    
    
    33,564
    
    
    
    1.62
    %
    
    
    3,575
    
    
    
    (250
    )
    
    
    3,825Borrowings
    
    
    272,685
    
    
    
    8,696
    
    
    
    3.19
    %
    
    
    340,363
    
    
    
    9,720
    
    
    
    2.86
    %
    
    
    (1,024
    )
    
    
    1,052
    
    
    
    (2,076
    )Total interest-bearing liabilities
    
    
    2,598,025
    
    
    
    45,835
    
    
    
    1.76
    %
    
    
    2,409,976
    
    
    
    43,284
    
    
    
    1.80
    %
    
    
    2,551
    
    
    
    802
    
    
    
    1,749Noninterest-bearing liabilitiesDemand deposits
    
    
    247,682
    
    
    
    
    
    
    
    
    
    
    
    245,193Other liabilities
    
    
    22,359
    
    
    
    
    
    
    
    
    
    
    
    25,176Total noninterest-bearing liabilities
    
    
    270,041
    
    
    
    
    
    
    
    
    
    
    
    270,369Total liabilities
    
    
    2,868,066
    
    
    
    
    
    
    
    
    
    
    
    2,680,345Shareholders equity
    
    
    30,418
    
    
    
    
    
    
    
    
    
    
    
    299,596Total liabilities and shareholders equity
    
    $
    2,898,484
    
    
    
    
    
    
    
    
    
    
    $
    2,979,941Net interest income
    
    
    
    
    
    $
    71,187
    
    
    
    
    
    
    
    
    
    
    $
    105,045Net interest spread
    
    
    
    
    
    
    
    
    
    
    3.01
    %
    
    
    
    
    
    
    
    
    
    
    3.56
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    2.90
    %
    
    
    
    
    
    
    
    
    
    
    3.80
    %
  41




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HAMPTON
ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS
  Nine Months Ended
    
    
    Nine Months EndedSeptember 30, 2010
    
    
    September 30, 2009
    
    
    2010 Compared to 2009Annualized
    
    
    
    
    
    
    
    
    
    
    Annualized
    
    
    
    
    
    
    InterestInterest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    Average
    
    
    Income/
    
    
    VarianceAverage
    
    
    Income/
    
    
    Yield/
    
    
    Average
    
    
    Income/
    
    
    Yield/
    
    
    Expense
    
    
    Attributable to(in thousands)
    
    Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate
    
    
    Variance
    
    
    Rate
    
    
    VolumeAssets:Interest-earning assetsLoans
    
    $
    1,973,677
    
    
    $
    117,827
    
    
    
    5.97
    %
    
    $
    2,586,189
    
    
    $
    146,257
    
    
    
    5.68
    %
    
    $
    (28,430
    )
    
    $
    7,597
    
    
    $
    (36,027
    )Investment securities
    
    
    202,703
    
    
    
    6,666
    
    
    
    3.29
    %
    
    
    161,462
    
    
    
    6,385
    
    
    
    3.97
    %
    
    
    281
    
    
    
    (1,203
    )
    
    
    1,484Interest-bearing deposits in other banks
    
    
    57,497
    
    
    
    137
    
    
    
    0.24
    %
    
    
    7,749
    
    
    
    28
    
    
    
    0.36
    %
    
    
    109
    
    
    
    (13
    )
    
    
    122Overnight funds sold and due from FRB
    
    
    248,092
    
    
    
    534
    
    
    
    0.22
    %
    
    
    38,351
    
    
    
    52
    
    
    
    0.14
    %
    
    
    482
    
    
    
    46
    
    
    
    436Total interest-earning assets
    
    
    2,481,969
    
    
    
    125,164
    
    
    
    5.04
    %
    
    
    2,793,751
    
    
    
    152,722
    
    
    
    5.49
    %
    
    
    (27,558
    )
    
    
    6,427
    
    
    
    (33,985
    )Noninterest-earning assets
    
    
    395,519
    
    
    
    
    
    
    
    
    
    
    
    280,324Total assets
    
    
    2,877,488
    
    
    
    
    
    
    
    
    
    
    
    3,074,075Liabilities and Shareholders Equity:Interest-bearing liabilitiesInterest-bearing demand deposits
    
    
    887,763
    
    
    
    13,422
    
    
    
    1.51
    %
    
    
    629,092
    
    
    
    6,255
    
    
    
    1.00
    %
    
    
    7,167
    
    
    
    3,952
    
    
    
    3,215Savings deposits
    
    
    77,483
    
    
    
    498
    
    
    
    0.64
    %
    
    
    117,479
    
    
    
    1,267
    
    
    
    1.08
    %
    
    
    (769
    )
    
    
    (417
    )
    
    
    (352
    )Time deposits
    
    
    1,350,176
    
    
    
    25,730
    
    
    
    1.91
    %
    
    
    1,284,089
    
    
    
    29,565
    
    
    
    2.31
    %
    
    
    (3,835
    )
    
    
    (5,331
    )
    
    
    1,496Total interest-bearing deposits
    
    
    2,315,422
    
    
    
    39,650
    
    
    
    1.71
    %
    
    
    2,030,660
    
    
    
    37,087
    
    
    
    1.83
    %
    
    
    2,563
    
    
    
    (1,796
    )
    
    
    4,359Borrowings
    
    
    275,212
    
    
    
    8,539
    
    
    
    3.10
    %
    
    
    430,611
    
    
    
    11,130
    
    
    
    2.59
    %
    
    
    (2,591
    )
    
    
    1,082
    
    
    
    (3,673
    )Total interest-bearing liabilities
    
    
    2,590,634
    
    
    
    48,189
    
    
    
    1.86
    %
    
    
    2,461,271
    
    
    
    48,217
    
    
    
    1.97
    %
    
    
    (28
    )
    
    
    (714
    )
    
    
    686Noninterest-bearing liabilitiesDemand deposits
    
    
    245,871
    
    
    
    
    
    
    
    
    
    
    
    249,069Other liabilities
    
    
    23,812
    
    
    
    
    
    
    
    
    
    
    
    35,548Total noninterest-bearing liabilities
    
    
    269,683
    
    
    
    
    
    
    
    
    
    
    
    284,617Total liabilities
    
    
    2,860,317
    
    
    
    
    
    
    
    
    
    
    
    2,745,888Shareholders equity
    
    
    17,171
    
    
    
    
    
    
    
    
    
    
    
    328,187Total liabilities and shareholders equity
    
    $
    2,877,488
    
    
    
    
    
    
    
    
    
    
    $
    3,074,075Net interest income
    
    
    
    
    
    $
    76,975
    
    
    
    
    
    
    
    
    
    
    $
    104,505Net interest spread
    
    
    
    
    
    
    
    
    
    
    3.18
    %
    
    
    
    
    
    
    
    
    
    
    3.52
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    3.10
    %
    
    
    
    
    
    
    
    
    
    
    3.75
    %
 Note:
    
    Interest income from loans included fees of $567 at September 30, 2010 and $1,747 at September 30, 2009. Average nonaccrual loans of $357 are excluded from average loans at
September 30, 2010. Average nonaccrual loans for September 30, 2009 were not material and are included in average loans above. 42




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##### Table of Contents



HAMPTON
ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS
 Noninterest Income .
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Service charges on deposit accounts
    
    $
    1,609
    
    
    $
    2,054
    
    
    $
    5,029
    
    
    $
    6,186Mortgage banking revenue
    
    
    4,262
    
    
    
    678
    
    
    
    8,621
    
    
    
    3,717Gain (loss) on sale of investment securities
    
    
    (1
    )
    
    
    2,695
    
    
    
    468
    
    
    
    2,695Gain on sale of premises and equipment
    
    
    117
    
    
    
    
    
    
    
    160
    
    
    
    Losses on foreclosed real estate and
repossessed assets
    
    
    (2,914
    )
    
    
    (572
    )
    
    
    (6,128
    )
    
    
    (880
    )Other-than-temporary impairment of securities
    
    
    (23
    )
    
    
    (211
    )
    
    
    (67
    )
    
    
    (343
    )Insurance revenue
    
    
    1,054
    
    
    
    1,243
    
    
    
    3,653
    
    
    
    3,894Brokerage revenue
    
    
    61
    
    
    
    108
    
    
    
    214
    
    
    
    239Income from bank-owned life insurance
    
    
    440
    
    
    
    412
    
    
    
    1,264
    
    
    
    1,217Visa check card income
    
    
    539
    
    
    
    366
    
    
    
    1,558
    
    
    
    1,024ATM surcharge fee
    
    
    95
    
    
    
    111
    
    
    
    280
    
    
    
    311Wire fees
    
    
    48
    
    
    
    42
    
    
    
    134
    
    
    
    130Rental income
    
    
    186
    
    
    
    40
    
    
    
    270
    
    
    
    26Other
    
    
    482
    
    
    
    266
    
    
    
    1,431
    
    
    
    1,111Total noninterest income
    
    $
    5,955
    
    
    $
    7,232
    
    
    $
    16,887
    
    
    $
    19,327
   Noninterest Expense .
  43




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##### Table of Contents



HAMPTON
ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(in thousands)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Salaries and employee benefits
    
    $
    12,591
    
    
    $
    10,366
    
    
    $
    33,296
    
    
    $
    32,146Occupancy
    
    
    2,317
    
    
    
    2,232
    
    
    
    6,765
    
    
    
    6,316Data processing
    
    
    1,185
    
    
    
    1,472
    
    
    
    3,834
    
    
    
    3,965Impairment of goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,976FDIC insurance
    
    
    946
    
    
    
    1,328
    
    
    
    3,171
    
    
    
    4,629Equipment
    
    
    1,035
    
    
    
    1,215
    
    
    
    3,058
    
    
    
    3,706Professional fees
    
    
    1,812
    
    
    
    167
    
    
    
    4,355
    
    
    
    505Problem loan and repossessed asset costs
    
    
    1,028
    
    
    
    82
    
    
    
    3,031
    
    
    
    242Amortization of intangible assets
    
    
    549
    
    
    
    646
    
    
    
    1,486
    
    
    
    1,727Bank franchise tax
    
    
    538
    
    
    
    177
    
    
    
    1,487
    
    
    
    532Telephone and postage
    
    
    455
    
    
    
    332
    
    
    
    1,258
    
    
    
    1,168Stationery, printing, and office supplies
    
    
    276
    
    
    
    386
    
    
    
    663
    
    
    
    745Directors and regional board fees
    
    
    179
    
    
    
    184
    
    
    
    539
    
    
    
    849Advertising and marketing
    
    
    163
    
    
    
    186
    
    
    
    549
    
    
    
    377Other
    
    
    1,705
    
    
    
    2,933
    
    
    
    5,322
    
    
    
    7,001Total
noninterest expense
    
    $
    24,779
    
    
    $
    21,706
    
    
    $
    68,814
    
    
    $
    91,884
   Income Tax Provision.
 44




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##### Table of Contents



HAMPTON
ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
      September 30, 2010
    
    
    December 31, 2009Change in Net Interest Income
    
    
    Change in Net Interest Income(in thousands)
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %Change in Interest Rates:+200 basis points
    
    $
    10,017
    
    
    
    13.10
    %
    
    $
    (4,861
    )
    
    
    (5.07
    )%+100 basis points
    
    
    4,578
    
    
    
    5.99
    %
    
    
    (2,129
    )
    
    
    (2.22
    )%-100 basis points
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A-200 basis points
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
  45




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HAMPTON
ROADS BANKSHARES, INC.
 PART I. FINANCIAL INFORMATION
 
 Item 4. Controls and Procedures
   46




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##### Table of Contents



HAMPTON
ROADS BANKSHARES, INC.
 
 PART
II. OTHER INFORMATION
 
 ITEM 1  LEGAL PROCEEDINGS
   
 ITEM 1A  RISK FACTORS
 Risks Related to our Business
 We
incurred significant losses in 2009 and through the third quarter of
2010 and may continue to do so
in the future, and we can make no assurances as to when we will be profitable.
   We may need to raise additional capital that may not be available to us.
   47




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##### Table of Contents



HAMPTON
ROADS BANKSHARES, INC.
 PART II. OTHER INFORMATION
 The Company has restated its financial statements, which may have a future adverse effect.
   BOHR
is restricted from accepting new brokered deposits, and an inability to maintain our regulatory
capital position could adversely affect our operations.
   The
Company has received a grand jury subpoena from the DOJ and, although
the Company is not a target, there can be no assurances as to the
timing or eventual outcome of the related investigation.
  Current and future increases in FDIC insurance premiums, including the FDIC special assessment
imposed on all FDIC-insured institutions, will decrease our earnings. In addition, FDIC insurance
assessments will likely increase from our prior inability to maintain a well-capitalized status,
which would further decrease earnings.
   We have entered into the Written Agreement with the Federal Reserve Bank of Richmond and the
Virginia Bureau of Financial Institutions, which requires us to dedicate a significant amount of
resources to complying with the agreement and may have a material adverse effect on our operations
and the value of our securities.
  48




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HAMPTON
ROADS BANKSHARES, INC.
 PART II. OTHER INFORMATION
  
    
    strengthen board oversight of management and BOHRs operations;
    
    strengthen credit risk management policies;
    
    improve BOHRs position with respect to loans, relationships, or
other assets in excess of $2.5 million that are now or in the future may become
past due more than 90 days, are on BOHRs problem loan list, or adversely
classified in any report of examination of BOHR;
    
    review and revise, as appropriate, current policy and maintain sound
processes for determining, documenting, and recording an adequate allowance for
loan and lease losses;
    
    improve management of BOHRs liquidity position and funds management
policies;
    
    provide contingency planning that accounts for adverse scenarios and
identifies and quantifies available sources of liquidity for each scenario;
    
    reduce BOHRs reliance on brokered deposits; and
    
    improve BOHRs earnings and overall condition.
  
    
    not extend, renew, or restructure any credit that has been criticized
by the FRB or the Bureau of Financial Institutions absent prior Board of Directors
approval in accordance with the restrictions in the Written Agreement;
    
    eliminate all assets or portions of assets classified as loss and
thereafter charge off all assets classified as loss in a federal or state report
of examination, unless otherwise approved by the FRB;
    
    comply with legal and regulatory limitations on indemnification
payments and severance payments; and
    
    appoint a committee to monitor compliance with the terms of the
Written Agreement.
  
    
    not take any other form of payment representing a reduction in BOHRs
capital or make any distributions of interest, principal, or other sums on
subordinated debentures or Trust Preferred Securities absent prior regulatory
approval;
    
    take all necessary steps to correct certain technical violations of
law and regulation cited by the FRB;
    
    refrain from guaranteeing any debt without the prior written approval
of the FRB and the Bureau of Financial Institutions; and
    
    refrain from purchasing or redeeming any shares of its stock without
the prior written consent of the FRB or the Bureau of Financial Institutions.
  49




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HAMPTON
ROADS BANKSHARES, INC.
 PART II. OTHER INFORMATION
  Our estimate for losses in our loan portfolio may be inadequate, which would cause our results of
operations and financial condition to be adversely affected.
  We have had and may continue to have large numbers of problem loans and difficulties with our loan
administration, which could increase our losses related to loans.
    50




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HAMPTON
ROADS BANKSHARES, INC.
 PART II. OTHER INFORMATION
  If we fail to meet the continued listing requirements of the NASDAQ Global Select Market, our
Common Stock could be delisted.
    Governmental regulation and regulatory actions against us may impair our operations or restrict our
growth.
  51




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HAMPTON
ROADS BANKSHARES, INC.
 PART II. OTHER INFORMATION
  
    
    The level of capital that must be maintained;
    
    The kinds of activities that can be engaged in;
    
    The kinds and amounts of investments that can be made;
    
    The locations of our financial centers;
    
    Insurance of deposits and the premiums that we must pay for this insurance; and
    
    The amount of cash we must set aside as reserves for deposits.
   If the value of real estate in the markets we serve were to further decline materially, a
significant portion of our loan portfolio could become further under-collateralized, which could
have a material adverse effect on us.
  Our commercial real estate and equity line lending may expose us to a greater risk of loss and hurt
our earnings and profitability.
  52




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HAMPTON
ROADS BANKSHARES, INC.
 PART II. OTHER INFORMATION
   A significant amount of our loan portfolio contains loans used to finance construction and land
development and these types of loans subject our loan portfolio to a higher degree of credit risk.
   Our lending on vacant land may expose us to a greater risk of loss and may have an adverse effect
on results of operations.
  Difficult market conditions have adversely affected our industry.
  53




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HAMPTON
ROADS BANKSHARES, INC.
 PART II. OTHER INFORMATION
  Our ability to maintain adequate sources of funding may be negatively impacted by the current
economic environment which may, among other things, impact our ability to resume the payment of
dividends or satisfy our obligations.
  Our ability to maintain adequate sources of liquidity may be negatively impacted by the current
economic environment which may, among other things, impact our ability to pay dividends or satisfy
our obligations.
   The current economic environment may negatively impact our ability to maintain required capital
levels or otherwise negatively impact our financial condition, which may, among other things, limit
our access to certain sources of funding and liquidity.
 54




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HAMPTON
ROADS BANKSHARES, INC.
 PART II. OTHER INFORMATION
  We may face increasing deposit-pricing pressures, which may, among other things, reduce our
profitability.
   We may continue to incur losses if we are unable to successfully manage interest rate risk.
  55




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HAMPTON
ROADS BANKSHARES, INC.
 PART II. OTHER INFORMATION
 Our future success is dependent on our ability to compete effectively in the highly competitive
banking industry.
  Our operations and customers might be affected by the occurrence of a natural disaster or other
catastrophic event in our market area .
  We face a variety of threats from technology based frauds and scams.
  Virginia law and the provisions of our Articles of Incorporation and Bylaws could deter or prevent
takeover attempts by a potential purchaser of our Common Stock that would be willing to pay you a
premium for your shares of our Common Stock.
  56




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HAMPTON
ROADS BANKSHARES, INC.
 PART II. OTHER INFORMATION
 Risks Relating to our Existing Capital Structure and Common Stock
 Because we will issue additional shares of Common Stock, existing shareholders could be subject to
substantial dilution.
  The market for our Common Stock historically has experienced significant price and volume
fluctuations.
  We are not paying dividends on our Common Stock and are prevented from doing so. The
failure to resume paying dividends on our Common Stock may adversely affect us.
   57




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HAMPTON
ROADS BANKSHARES, INC.
 PART II. OTHER INFORMATION
  Risks Relating to Market, Legislative, and Regulatory Events
 Our business, financial condition, and results of operations are highly regulated and could be
adversely affected by new or changed regulations and by the manner in which such regulations are
applied by regulatory authorities.
    Banking regulators have broad enforcement power, but regulations are meant to protect depositors
and not investors.
  The fiscal, monetary, and regulatory policies of the Federal Government and its agencies could have
a material adverse effect on our results of operations.
  58




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HAMPTON
ROADS BANKSHARES, INC.
 PART II. OTHER INFORMATION
  The recently enacted Dodd-Frank Act may adversely affect our business, financial condition, and
results of operations.
   The soundness of other financial institutions could adversely affect us.
  
 ITEM 2
    
     UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3
    
     DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4
    
     REMOVED AND RESERVED
 
 ITEM 5
    
    - OTHER INFORMATION
  59




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HAMPTON
ROADS BANKSHARES, INC.
 PART II. OTHER INFORMATION
 
 ITEM 6
    
     EXHIBITS
 3.1
    
    Amended and Restated Articles of Incorporation of Hampton Roads Bankshares, Inc., attached
as Exhibit 3.1 to the Registrants Current Report on Form
8-K dated September 28, 2010,
incorporated herein by reference.3.2
    
    Bylaws of Hampton Roads Bankshares, Inc., as amended, incorporated by reference from the
Registrants Form 8-K, filed September 24, 2009.4.1
    
    Specimen of Common Stock Certificate.*4.2
    
    Carlyle Contingent Warrant for Purchase of Common Stock.*4.3
    
    Anchorage Contingent Warrant for Purchase of Common Stock.*4.4
    
    Anchorage Standard Warrant for Purchase of Common Stock.*4.5
    
    CapGen Contingent Warrant for Purchase of Common Stock.*4.6
    
    CapGen Standard Warrant for Purchase of Common Stock.*4.7
    
    Amended and Restated Warrant for Purchase of Shares of Common Stock issued to the United
States Department of the Treasury, incorporated by reference from the Registrants Form 8-K,
filed August 18, 2010.4.8
    
    Letter Agreement, dated December 31, 2008, by and between Hampton Roads Bankshares, Inc.
and the United States Department of the Treasury, incorporated by reference from the
Registrants Form 8-K, filed January 5, 2009.4.9
    
    Exchange Agreement, dated August 12, 2010, by and between Hampton Roads Bankshares, Inc.
and the United States Department of the Treasury, incorporated by reference from the
Registrants Form 8-K, filed August 18, 2010.10.1
    
    Second Amended and Restated Investment Agreement, dated August 11, 2010, incorporated by
reference from the Registrants Form 8-K, filed August 17, 2010.10.2
    
    Amended and Restated CapGen Investment Agreement, dated August 11, 2010, incorporated by
reference from the Registrants Form 8-K, filed August 17, 2010.10.3
    
    Form of Second Amended and Restated Securities Purchase Agreement, incorporated by
reference from the Registrants Form 8-K, filed August 17, 2010.10.4
    
    Amended and Restated Securities Purchase Agreement, dated August 11, 2010, incorporated by
reference from the Registrants Form 8-K, filed August 17, 2010.10.5
    
    Carlyle Investor Letter, dated August 11, 2010, incorporated by reference from the
Registrants Form 8-K, filed August 17, 2010.10.6
    
    Anchorage Investor Letter, dated August 11, 2010, incorporated by reference from the
Registrants Form 8-K, filed August 17, 2010.10.7
    
    CapGen Investor Letter, dated August 11, 2010, incorporated by reference from the
Registrants Form 8-K, filed August 17, 2010.10.8
    
    Consent Letter with affiliate of Davidson Kempner, dated August 11, 2010, incorporated by
reference from the Registrants Form 8-K, filed August 17, 2010.10.9
    
    Consent Letter with affiliates of Fir Tree, dated August 11, 2010, incorporated by
reference from the Registrants Form 8-K, filed August 17, 2010.10.10
    
    Assignment and Assumption Agreement, among Goldman, Sachs & Co., CapGen Capital Group VI
LP, and C12 Protium Value Opportunities Ltd., dated September 23, 2010, incorporated by
reference from the Registrants Form 8-K, filed September 23, 2010.
 60




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HAMPTON
ROADS BANKSHARES, INC.
 PART II. OTHER INFORMATION
 31.1
    
    The Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.*31.2
    
    The Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.*32.1
    
    Statement of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.*
 
 *
    
    Filed herewith 61




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SIGNATURES
  HAMPTON ROADS BANKSHARES, INC.
(Registrant)DATE:  November 9, 2010
    
    /s/ Lorelle FritschLorelle FritschInterim Chief Financial Officer
(On behalf of the Registrant and 
as Principal Financial Officer) 62