##### Table of Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2007

Commission File Number
001-32968



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HAMPTON ROADS BANKSHARES, INC.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|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)



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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2
of the Exchange Act. (Check one):

Large accelerated filer ̈Accelerated filer  xNon-accelerated filer ̈

Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act).    Yes ̈No  x

Indicate the number of shares outstanding of each of the
issuers classes of common stock as of April 27, 2007.



|                               |  |                  
|------------------------------ |  | -----------------
|Common Stock, $0.625 Par Value |  | 10,269,030 Shares



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##### Table of Contents

HAMPTON ROADS BANKSHARES, INC.

TABLE OF CONTENTS



|                               |  |                                                                                                |  |                                                            |  |  
|------------------------------ |  | ---------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------- |  | -
|PART I  FINANCIAL INFORMATION |  |                                                                                               
|                               |  |                                                                                               
|                               |  | ITEM  1 FINANCIAL STATEMENTS                                                                  |  |                                                           
|                               |  |                                                                                                | 
|                               |  |                                                                                                |  | Consolidated Balance Sheets                                |  | 3
|                               |  |                                                                                                | 
|                               |  |                                                                                                |  | March 31, 2007                                             |  |  
|                               |  |                                                                                                |  | December 31, 2006                                          |  |  
|                               |  |                                                                                                | 
|                               |  |                                                                                                |  | Consolidated Statements of Income                          |  | 4
|                               |  |                                                                                                | 
|                               |  |                                                                                                |  | Three months ended March 31, 2007 and 2006                 |  |  
|                               |  |                                                                                                | 
|                               |  |                                                                                                |  | Consolidated Statements of Changes in Shareholders Equity |  | 5
|                               |  |                                                                                                | 
|                               |  |                                                                                                |  | Three months ended March 31, 2007                          |  |  
|                               |  |                                                                                                |  | Year ended December 31, 2006                               |  |  
|                               |  |                                                                                                | 
|                               |  |                                                                                                |  | Consolidated Statements of Cash Flows                      |  | 6
|                               |  |                                                                                                | 
|                               |  |                                                                                                |  | Three months ended March 31, 2007 and 2006                 |  |  
|                               |  |                                                                                                | 
|                               |  |                                                                                                |  | Notes to Consolidated Financial Statements                 |  | 7
|                               |  |                                                                                               
|                               |  | ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |  | 10                                                        
|                               |  |                                                                                               
|                               |  | ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                            |  | 14                                                        
|                               |  |                                                                                               
|                               |  | ITEM 4  CONTROLS AND PROCEDURES                                                               |  | 15                                                        
|                               | 
|PART II  OTHER INFORMATION    |  |                                                                                               
|                               |  |                                                                                               
|                               |  | ITEM 1  LEGAL PROCEEDINGS                                                                     |  | 15                                                        
|                               |  |                                                                                               
|                               |  | ITEM 1A  RISK FACTORS                                                                         |  | 15                                                        
|                               |  |                                                                                               
|                               |  | ITEM 2  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS                           |  | 15                                                        
|                               |  |                                                                                               
|                               |  | ITEM 3  DEFAULTS UPON SENIOR SECURITIES                                                       |  | 16                                                        
|                               |  |                                                                                               
|                               |  | ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                   |  | 16                                                        
|                               |  |                                                                                               
|                               |  | ITEM 5  OTHER INFORMATION                                                                     |  | 16                                                        
|                               |  |                                                                                               
|                               |  | ITEM 6  EXHIBITS                                                                              |  | 16                                                        
|                               |  |                                                                                               
|SIGNATURES                     |  |                                                                                                |  | 17                                                        



2



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##### Table of Contents

PART I  FINANCIAL INFORMATION

ITEM 1  FINANCIAL STATEMENTS

HAMPTON ROADS BANKSHARES, INC.

Consolidated Balance Sheets



|                                                                                                                                             |  |                |             |   |                   |   |             |  
|-------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ----------- | - | ----------------- | - | ----------- | -
|                                                                                                                                             |  | (Unaudited)    |             |   |                   |  
|                                                                                                                                             |  | March 31, 2007 |             |   | December 31, 2006 |  
|Assets:                                                                                                                                      |  |                |             |   |                   |   |             |  
|Cash and due from banks                                                                                                                      |  | $              | 15,132,303  |   |                   | $ | 17,112,616  |  
|Overnight funds sold                                                                                                                         |  |                | 136,603     |   |                   |   | 9,524,445   |  
|Interest-bearing deposits in other banks                                                                                                     |  |                | 8,665,378   |   |                   |   | 161,490     |  
|                                                                                                                                             |  |                |             |   |                   |   |             |  
|Total cash and cash equivalents                                                                                                              |  |                | 23,934,284  |   |                   |   | 26,798,551  |  
|                                                                                                                                             |  |               
|Investment securities available-for-sale, at fair value                                                                                      |  |                | 53,775,530  |   |                   |   | 55,569,440  |  
|Federal Home Loan Bank stock                                                                                                                 |  |                | 3,127,500   |   |                   |   | 2,597,900   |  
|Federal Reserve Bank stock                                                                                                                   |  |                | 1,377,350   |   |                   |   | 1,377,350   |  
|                                                                                                                                             |  |                |             |   |                   |   |             |  
|Total investments                                                                                                                            |  |                | 58,280,380  |   |                   |   | 59,544,690  |  
|                                                                                                                                             |  |               
|Loans                                                                                                                                        |  |                | 404,378,898 |   |                   |   | 375,044,161 |  
|Allowance for loan losses                                                                                                                    |  |                | (4,133,702  | ) |                   |   | (3,910,943  | )
|                                                                                                                                             |  |                |             |   |                   |   |             |  
|Net loans                                                                                                                                    |  |                | 400,245,196 |   |                   |   | 371,133,218 |  
|                                                                                                                                             |  |               
|Premises and equipment                                                                                                                       |  |                | 12,002,814  |   |                   |   | 12,183,884  |  
|Interest receivable                                                                                                                          |  |                | 2,487,215   |   |                   |   | 2,281,945   |  
|Deferred tax asset                                                                                                                           |  |                | 2,137,715   |   |                   |   | 2,209,117   |  
|Other assets                                                                                                                                 |  |                | 2,647,564   |   |                   |   | 2,148,063   |  
|                                                                                                                                             |  |                |             |   |                   |   |             |  
|Total assets                                                                                                                                 |  | $              | 501,735,168 |   |                   | $ | 476,299,468 |  
|                                                                                                                                             |  |                |             |   |                   |   |             |  
|                                                                                                                                             |  |               
|Liabilities and Shareholders Equity:                                                                                                        |  |                |             |   |                   |   |             |  
|Deposits:                                                                                                                                    |  |                |             |   |                   |   |             |  
|Noninterest bearing demand                                                                                                                   |  |                | 98,351,254  |   |                   |   | 97,559,421  |  
|Interest bearing:                                                                                                                            |  |                |             |   |                   |   |             |  
|Demand                                                                                                                                       |  |                | 41,300,872  |   |                   |   | 42,486,451  |  
|Savings                                                                                                                                      |  |                | 75,988,060  |   |                   |   | 73,830,518  |  
|Time deposits:                                                                                                                               |  |                |             |   |                   |   |             |  
|Less than $100,000                                                                                                                           |  |                | 81,246,724  |   |                   |   | 76,756,540  |  
|$100,000 or more                                                                                                                             |  |                | 77,137,583  |   |                   |   | 72,628,399  |  
|                                                                                                                                             |  |                |             |   |                   |   |             |  
|Total deposits                                                                                                                               |  |                | 374,024,493 |   |                   |   | 363,261,329 |  
|                                                                                                                                             |  |               
|Federal Home Loan Bank borrowings                                                                                                            |  |                | 50,500,000  |   |                   |   | 38,000,000  |  
|Interest payable                                                                                                                             |  |                | 1,375,871   |   |                   |   | 1,472,889   |  
|Other liabilities                                                                                                                            |  |                | 4,796,748   |   |                   |   | 3,402,707   |  
|                                                                                                                                             |  |                |             |   |                   |   |             |  
|Total liabilities                                                                                                                            |  |                | 430,697,112 |   |                   |   | 406,136,925 |  
|                                                                                                                                             |  |                |             |   |                   |   |             |  
|Shareholders equity:                                                                                                                        |  |                |             |   |                   |   |             |  
|Preferred stock, no par value. Authorized 1,000,000 shares; none issued and outstanding                                                      |  |                |            |   |                   |   |            |  
|Common stock, $0.625 par value. Authorized 40,000,000 shares; issued and outstanding 10,269,030 shares in 2007 and 10,251,336 shares in
2006 |  |                | 6,418,144   |   |                   |   | 6,407,085   |  
|Capital surplus                                                                                                                              |  |                | 42,324,200  |   |                   |   | 42,105,666  |  
|Retained earnings                                                                                                                            |  |                | 22,598,506  |   |                   |   | 22,091,191  |  
|Accumulated other comprehensive loss, net of tax                                                                                             |  |                | (302,794    | ) |                   |   | (441,399    | )
|                                                                                                                                             |  |                |             |   |                   |   |             |  
|Total shareholders equity                                                                                                                   |  |                | 71,038,056  |   |                   |   | 70,162,543  |  
|                                                                                                                                             |  |                |             |   |                   |   |             |  
|Total liabilities and shareholders equity                                                                                                   |  | $              | 501,735,168 |   |                   | $ | 476,299,468 |  
|                                                                                                                                             |  |                |             |   |                   |   |             |  

See accompanying notes to the consolidated financial statements (unaudited).



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##### Table of Contents

HAMPTON ROADS BANKSHARES, INC.

Consolidated Statements of Income



|                                                      |  |                    |            |                |   |          
|----------------------------------------------------- |  | ------------------ | ---------- | -------------- | - | ---------
|                                                      |  | Three Months Ended
|                                                      |  | March 31, 2007     |            | March 31, 2006
|Interest Income:                                      |  |                    |            |                |   |          
|Loans, including fees                                 |  | $                  | 8,072,503  |                | $ | 5,726,714
|Investment securities                                 |  |                    | 614,663    |                |   | 732,618  
|Overnight funds sold                                  |  |                    | 22,728     |                |   | 39,701   
|Interest-bearing deposits in other banks              |  |                    | 33,657     |                |   | 17,367   
|                                                      |  |                    |            |                |   |          
|Total interest income                                 |  |                    | 8,743,551  |                |   | 6,516,400
|                                                      |  |                    |            |                |   |          
|Interest Expense:                                     |  |                    |            |                |   |          
|Deposits:                                             |  |                    |            |                |   |          
|Demand                                                |  |                    | 169,053    |                |   | 75,899   
|Savings                                               |  |                    | 676,385    |                |   | 494,161  
|Time deposits:                                        |  |                    |            |                |   |          
|Less than $ 100,000                                   |  |                    | 885,154    |                |   | 545,685  
|$100,000 or more                                      |  |                    | 912,640    |                |   | 333,571  
|                                                      |  |                    |            |                |   |          
|Interest on deposits                                  |  |                    | 2,643,232  |                |   | 1,449,316
|Federal Home Loan Bank borrowings                     |  |                    | 435,502    |                |   | 243,308  
|Overnight funds purchased                             |  |                    | 11,216     |                |   | 22,114   
|                                                      |  |                    |            |                |   |          
|Total interest expense                                |  |                    | 3,089,950  |                |   | 1,714,738
|                                                      |  |                    |            |                |   |          
|Net interest income                                   |  |                    | 5,653,601  |                |   | 4,801,662
|                                                      |  |                   
|Provision for loan losses                             |  |                    | 222,000    |                |   |         
|                                                      |  |                    |            |                |   |          
|Net interest income after provision for loan losses   |  |                    | 5,431,601  |                |   | 4,801,662
|                                                      |  |                    |            |                |   |          
|Noninterest Income:                                   |  |                    |            |                |   |          
|Service charges on deposit accounts                   |  |                    | 487,628    |                |   | 454,738  
|Other service charges and fees                        |  |                    | 436,348    |                |   | 459,720  
|                                                      |  |                    |            |                |   |          
|Total noninterest income                              |  |                    | 923,976    |                |   | 914,458  
|                                                      |  |                    |            |                |   |          
|Noninterest Expense:                                  |  |                    |            |                |   |          
|Salaries and employee benefits                        |  |                    | 2,554,487  |                |   | 2,181,758
|Occupancy                                             |  |                    | 413,979    |                |   | 402,120  
|Data processing                                       |  |                    | 158,790    |                |   | 144,480  
|Other                                                 |  |                    | 906,622    |                |   | 982,079  
|                                                      |  |                    |            |                |   |          
|Total noninterest expense                             |  |                    | 4,033,878  |                |   | 3,710,437
|                                                      |  |                    |            |                |   |          
|Income before provision for income taxes              |  |                    | 2,321,699  |                |   | 2,005,683
|Provision for income taxes                            |  |                    | 789,377    |                |   | 685,782  
|                                                      |  |                    |            |                |   |          
|Net income                                            |  | $                  | 1,532,322  |                | $ | 1,319,901
|                                                      |  |                    |            |                |   |          
|Earnings Per Share:                                   |  |                    |            |                |   |          
|                                                      |  |                   
|Basic earnings per share                              |  | $                  | 0.15       |                | $ | 0.16     
|                                                      |  |                    |            |                |   |          
|Diluted earnings per share                            |  | $                  | 0.15       |                | $ | 0.16     
|                                                      |  |                    |            |                |   |          
|Basic weighted average shares outstanding             |  |                    | 10,224,600 |                |   | 8,283,770
|Effect of dilutive stock options and non-vested stock |  |                    | 166,005    |                |   | 194,441  
|                                                      |  |                    |            |                |   |          
|Diluted weighted average shares outstanding           |  |                    | 10,390,605 |                |   | 8,478,211
|                                                      |  |                    |            |                |   |          

See accompanying notes to the consolidated financial statements (unaudited).



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HAMPTON ROADS BANKSHARES, INC.

Consolidated Statement of Changes in Shareholders Equity

Three months ended March 31, 2007 and year end December 31, 2006



|                                                                                             |  |              |   |  |                 |           |   |                  |   |            |                                               |  |   |            |   |  |   |          |   |  |   |            |  
|-------------------------------------------------------------------------------------------- |  | ------------ | - |  | --------------- | --------- | - | ---------------- | - | ---------- | --------------------------------------------- |  | - | ---------- | - |  | - | -------- | - |  | - | ---------- | -
|                                                                                             |  | Common Stock |   |  | Capital Surplus |           |   | RetainedEarnings |   |            | AccumulatedOtherComprehensiveLoss, Net of Tax |  |   | Total      |  
|                                                                                             |  | Shares       |   |  | Amount          |           |   |                  |   |           
|Balance at December 31, 2005                                                                 |  | 8,242,822    |   |  | $               | 5,151,764 |   |                  | $ | 23,852,040 |                                               |  | $ | 20,770,448 |   |  | $ | (643,723 | ) |  | $ | 49,130,529 |  
|Comprehensive income:                                                                        |  |              |   |  |                 |           |   |                  |   |            |                                               |  |   |            |   |  |   |          |   |  |   |            |  
|Net income                                                                                   |  |             |   |  |                 |          |   |                  |   |           |                                               |  |   | 6,035,539  |   |  |   |         |   |  |   | 6,035,539  |  
|Change in unrealized gain (loss) on securities available-for-sale, net of taxes of $ 104,228 |  |             |   |  |                 |          |   |                  |   |           |                                               |  |   |           |   |  |   | 202,324  |   |  |   | 202,324    |  
|                                                                                             |  |              |   |  |                 |           |   |                  |   |            |                                               |  |   |            |   |  |   |          |   |  |   |            |  
|Total comprehensive income                                                                   |  |              |   |  |                 |           |   |                  |   |            |                                               |  |   |            |   |  |   |          |   |  |   | 6,237,863  |  
|Shares issued related to:                                                                    |  |              |   |  |                 |           |   |                  |   |            |                                               |  |   |            |   |  |   |          |   |  |   |            |  
|401(k) plan                                                                                  |  | 11,333       |   |  |                 | 7,083     |   |                  |   | 115,312    |                                               |  |   |           |   |  |   |         |   |  |   | 122,395    |  
|Advisory board fees                                                                          |  | 2,332        |   |  |                 | 1,457     |   |                  |   | 23,843     |                                               |  |   |           |   |  |   |         |   |  |   | 25,300     |  
|Exercise of stock options                                                                    |  | 277,041      |   |  |                 | 173,151   |   |                  |   | 1,432,735  |                                               |  |   |           |   |  |   |         |   |  |   | 1,605,886  |  
|Dividend reinvestment                                                                        |  | 229,090      |   |  |                 | 143,181   |   |                  |   | 2,512,766  |                                               |  |   |           |   |  |   |         |   |  |   | 2,655,947  |  
|Stock-based compensation expense                                                             |  | 20,131       |   |  |                 | 12,582    |   |                  |   | 167,229    |                                               |  |   |           |   |  |   |         |   |  |   | 179,811    |  
|Stock offering, net of costs of $ 1,109,824                                                  |  | 1,849,200    |   |  |                 | 1,155,750 |   |                  |   | 17,890,706 |                                               |  |   |           |   |  |   |         |   |  |   | 19,046,456 |  
|Common stock repurchased                                                                     |  | (380,613     | ) |  |                 | (237,883  | ) |                  |   | (4,035,983 | )                                             |  |   |           |   |  |   |         |   |  |   | (4,273,866 | )
|Tax benefit of stock option exercises                                                        |  |             |   |  |                 |          |   |                  |   | 147,018    |                                               |  |   |           |   |  |   |         |   |  |   | 147,018    |  
|Cash dividends ($0.50 per share)                                                             |  |             |   |  |                 |          |   |                  |   |           |                                               |  |   | (4,714,796 | ) |  |   |         |   |  |   | (4,714,796 | )
|                                                                                             |  |              |   |  |                 |           |   |                  |   |            |                                               |  |   |            |   |  |   |          |   |  |   |            |  
|Balance at December 31, 2006                                                                 |  | 10,251,336   |   |  | $               | 6,407,085 |   |                  | $ | 42,105,666 |                                               |  | $ | 22,091,191 |   |  | $ | (441,399 | ) |  | $ | 70,162,543 |  
|                                                                                             |  |              |   |  |                 |           |   |                  |   |            |                                               |  |   |            |   |  |   |          |   |  |   |            |  
|(Unaudited)                                                                                  |  |              |   |  |                 |           |   |                  |   |            |                                               |  |   |            |   |  |   |          |   |  |   |            |  
|Comprehensive income:                                                                        |  |              |   |  |                 |           |   |                  |   |            |                                               |  |   |            |   |  |   |          |   |  |   |            |  
|Net income                                                                                   |  |             |   |  |                 |          |   |                  |   |           |                                               |  |   | 1,532,322  |   |  |   |         |   |  |   | 1,532,322  |  
|Change in unrealized gain (loss) on securities available-for-sale, net of taxes of $ 71,402  |  |             |   |  |                 |          |   |                  |   |           |                                               |  |   |           |   |  |   | 138,605  |   |  |   | 138,605    |  
|                                                                                             |  |              |   |  |                 |           |   |                  |   |            |                                               |  |   |            |   |  |   |          |   |  |   |            |  
|Total comprehensive income                                                                   |  |              |   |  |                 |           |   |                  |   |            |                                               |  |   |            |   |  |   |          |   |  |   | 1,670,927  |  
|Shares issued related to:                                                                    |  |              |   |  |                 |           |   |                  |   |            |                                               |  |   |            |   |  |   |          |   |  |   |            |  
|401(k) plan                                                                                  |  | 11,020       |   |  |                 | 6,888     |   |                  |   | 130,312    |                                               |  |   |           |   |  |   |         |   |  |   | 137,200    |  
|Executive savings plan                                                                       |  | 11,686       |   |  |                 | 7,304     |   |                  |   | 138,187    |                                               |  |   |           |   |  |   |         |   |  |   | 145,491    |  
|Advisory board fees                                                                          |  | 931          |   |  |                 | 582       |   |                  |   | 11,009     |                                               |  |   |           |   |  |   |         |   |  |   | 11,591     |  
|Exercise of stock options                                                                    |  | 9,295        |   |  |                 | 5,809     |   |                  |   | 77,416     |                                               |  |   |           |   |  |   |         |   |  |   | 83,225     |  
|Dividend reinvestment                                                                        |  | 40,959       |   |  |                 | 25,599    |   |                  |   | 509,326    |                                               |  |   |           |   |  |   |         |   |  |   | 534,925    |  
|Stock-based compensation expense                                                             |  | 10,364       |   |  |                 | 6,477     |   |                  |   | 166,930    |                                               |  |   |           |   |  |   |         |   |  |   | 173,407    |  
|Common stock repurchased                                                                     |  | (66,561      | ) |  |                 | (41,600   | ) |                  |   | (814,646   | )                                             |  |   |           |   |  |   |         |   |  |   | (856,246   | )
|Cash dividends ($0.10 per share)                                                             |  |             |   |  |                 |          |   |                  |   |           |                                               |  |   | (1,025,007 | ) |  |   |         |   |  |   | (1,025,007 | )
|                                                                                             |  |              |   |  |                 |           |   |                  |   |            |                                               |  |   |            |   |  |   |          |   |  |   |            |  
|Balance at March 31, 2007                                                                    |  | 10,269,030   |   |  | $               | 6,418,144 |   |                  | $ | 42,324,200 |                                               |  | $ | 22,598,506 |   |  | $ | (302,794 | ) |  | $ | 71,038,056 |  
|                                                                                             |  |              |   |  |                 |           |   |                  |   |            |                                               |  |   |            |   |  |   |          |   |  |   |            |  

See accompanying notes to the consolidated financial statements (unaudited).



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##### Table of Contents

HAMPTON ROADS BANKSHARES, INC.

Consolidated Statements of Cash Flows (Unaudited)



|                                                                                  |  |                    |             |   |                |   |             |  
|--------------------------------------------------------------------------------- |  | ------------------ | ----------- | - | -------------- | - | ----------- | -
|                                                                                  |  | Three Months Ended |            
|                                                                                  |  | March 31, 2007     |             |   | March 31, 2006 |  
|Operating Activities:                                                             |  |                    |             |   |                |   |             |  
|Net income                                                                        |  | $                  | 1,532,322   |   |                | $ | 1,319,901   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                    |             |   |                |   |             |  
|Depreciation and amortization                                                     |  |                    | 225,017     |   |                |   | 218,442     |  
|Provision for loan losses                                                         |  |                    | 222,000     |   |                |   |            |  
|Advisory board fees                                                               |  |                    | 11,591      |   |                |   | 25,300      |  
|Stock-based compensation expense                                                  |  |                    | 173,407     |   |                |   | 135,604     |  
|Net amortization of premiums and accretion of discounts on investment securities  |  |                    | (84         | ) |                |   | 11,987      |  
|Deferred income tax benefit                                                       |  |                    |            |   |                |   | (235,152    | )
|Changes in:                                                                       |  |                    |             |   |                |   |             |  
|Interest receivable                                                               |  |                    | (205,270    | ) |                |   | (217,369    | )
|Other assets                                                                      |  |                    | (499,501    | ) |                |   | (91,525     | )
|Interest payable                                                                  |  |                    | (97,018     | ) |                |   | 46,473      |  
|Other liabilities                                                                 |  |                    | 1,394,042   |   |                |   | 1,184,743   |  
|                                                                                  |  |                    |             |   |                |   |             |  
|Net cash provided by operating activities                                         |  |                    | 2,756,506   |   |                |   | 2,398,404   |  
|                                                                                  |  |                    |             |   |                |   |             |  
|Investing Activities:                                                             |  |                    |             |   |                |   |             |  
|Proceeds from maturities and calls of investment securities available-for-sale    |  |                    | 2,004,001   |   |                |   | 2,004,730   |  
|Purchase of investment securities available-for-sale                              |  |                    |            |   |                |   | (1,839,057  | )
|Proceeds from sales of Federal Home Loan Bank stock                               |  |                    |            |   |                |   | 382,500     |  
|Purchase of Federal Home Loan Bank stock                                          |  |                    | (529,600    | ) |                |   | (513,800    | )
|Purchase of Federal Reserve Bank stock                                            |  |                    |            |   |                |   | (44,400     | )
|Net increase in total loans                                                       |  |                    | (29,333,978 | ) |                |   | (11,156,216 | )
|Purchase of premises and equipment                                                |  |                    | (43,947     | ) |                |   | (451,237    | )
|                                                                                  |  |                    |             |   |                |   |             |  
|Net cash used in investing activities                                             |  |                    | (27,903,524 | ) |                |   | (11,617,480 | )
|                                                                                  |  |                    |             |   |                |   |             |  
|Financing Activities:                                                             |  |                    |             |   |                |   |             |  
|Net increase in deposits                                                          |  |                    | 10,763,163  |   |                |   | 1,676,315   |  
|Proceeds from Federal Home Loan Bank borrowings                                   |  |                    | 12,500,000  |   |                |   |            |  
|Common stock repurchased                                                          |  |                    | (831,923    | ) |                |   | (1,128,259  | )
|Issuance of shares related to 401(k) plan                                         |  |                    | 137,200     |   |                |   | 122,395     |  
|Issuance of shares related to executive savings plan                              |  |                    | 145,491     |   |                |   |            |  
|Proceeds from exercise of stock options                                           |  |                    | 58,902      |   |                |   | 196,107     |  
|Excess tax benefit realized from stock options exercised                          |  |                    |            |   |                |   | 189,558     |  
|Dividends paid, net                                                               |  |                    | (490,082    | ) |                |   | (659,663    | )
|                                                                                  |  |                    |             |   |                |   |             |  
|Net cash provided by financing activities                                         |  |                    | 22,282,751  |   |                |   | 396,453     |  
|                                                                                  |  |                    |             |   |                |   |             |  
|Decrease in cash and cash equivalents                                             |  |                    | (2,864,267  | ) |                |   | (8,822,623  | )
|Cash and cash equivalents at beginning of period                                  |  |                    | 26,798,551  |   |                |   | 36,740,655  |  
|                                                                                  |  |                    |             |   |                |   |             |  
|Cash and cash equivalents at end of period                                        |  | $                  | 23,934,284  |   |                | $ | 27,918,032  |  
|                                                                                  |  |                    |             |   |                |   |             |  
|Supplemental cash flow information:                                               |  |                    |             |   |                |   |             |  
|Cash paid during the period for interest                                          |  | $                  | 3,186,968   |   |                | $ | 1,668,265   |  
|Cash paid during the period for income taxes                                      |  |                    |            |   |                |   | 150,000     |  
|Supplemental noncash information:                                                 |  |                    |             |   |                |   |             |  
|Dividends reinvested                                                              |  | $                  | 534,925     |   |                | $ | 1,012,441   |  
|Value of shares exchanged in exercise of stock options                            |  |                    | 24,323      |   |                |   | 849,237     |  

See accompanying notes to the consolidated financial statements (unaudited).



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HAMPTON ROADS BANKSHARES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

March 31, 2007

NOTE A  BASIS OF
PRESENTATION

Hampton Roads Bankshares, Inc., a Virginia corporation (the Company), was incorporated under the laws of the
Commonwealth of Virginia on February 28, 2001, primarily to serve as a holding company for Bank of Hampton Roads (the Bank). All significant intercompany balances and transactions have been eliminated in consolidation.

The Bank is a Virginia state-chartered commercial bank with 17 full service offices in the
Hampton Roads region of southeastern Virginia, including eight offices in the city of Chesapeake, four offices in each of the cities of Norfolk and Virginia Beach, and one office in the city of Suffolk. The Bank was organized in March 1987 and
commenced operations in December 1987. The Banks principal executive office is located at 999 Waterside Drive, 2ndFloor, Norfolk, VA 23510 and our telephone number is (757) 217-1000.

In January 2004, the Company formed Hampton
Roads Investments, Inc., a wholly owned subsidiary, to provide securities, brokerage, and investment advisory services. It is a full service investment services firm handling all aspects of wealth management including stocks, bonds, annuities,
mutual funds and financial advice.

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.
S. generally accepted accounting principles for interim financial reporting and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by U. S. generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Companys annual report on Form 10-K for the year ended December 31, 2006 (the 2006 Form 10-K). The results of operations for the three months ended March 31, 2007 are not
necessarily indicative of the results to be expected for the full year.

NOTE B  SHARE-BASED COMPENSATION

The Company adopted Statement of Financial Accounting Standards (SFAS) No. 123R, Share Based Payment, on January 1, 2006, using the
modified prospective method which applies SFAS No. 123R to new awards and to the portion of existing awards that had not completely vested as of January 1, 2006. During 2006 and 2005, the Company used the fair-value method to account for
stock-based compensation and the fair value of stock options was estimated at the date of grant using a lattice option pricing model.

Stock-based compensation expense recognized in the consolidated statements of income for the quarters ended March 31, 2007 and March 31, 2006 was $173,408 and $135,604, respectively, with a related tax benefit of $58,959 and
$46,105, respectively. During the first quarters of 2007 and 2006, stock-based compensation expense was comprised of $35,497 and $13,385, respectively, related to stock options which vested during the period, and $137,911 and $122,219, respectively,
related to share awards.

The Company has granted stock options to its directors and employees under stock compensation plans that have
been approved by the Companys shareholders. All outstanding options, other than the options granted on December 31, 2006, have 10-year terms and are fully vested and exercisable at the date of grant. The options granted on
December 31, 2006 have 10-year terms and vest ratably over periods that range from 1 year to 5 years. A summary of the Companys stock option activity and related information for the three months ended March 31, 2007 is as follows:



|                             |  |                         |  |                               |       |                                     |      |                         |   |          
|---------------------------- |  | ----------------------- |  | ----------------------------- | ----- | ----------------------------------- | ---- | ----------------------- | - | ---------
|                             |  | StockOptionsOutstanding |  | WeightedAverageExercise Price |       | RemainingContractual Life(in years) |      | AggregateIntrinsicValue
|Balance at December 31, 2006 |  | 929,970                 |  | $                             | 9.19  |                                     |     |                         | $ |         
|Granted                      |  | 1,965                   |  |                               | 12.38 |                                     |     |                         |   |         
|Forfeited                    |  | 1,000                   |  |                               | 12.00 |                                     |     |                         |   |         
|Exercised                    |  | 9,295                   |  |                               | 8.95  |                                     |     |                         |   |         
|                             |  |                         |  |                               |       |                                     |      |                         |   |          
|Balance at March 31, 2007    |  | 921,640                 |  | $                             | 9.29  |                                     | 6.27 |                         | $ | 3,044,115
|                             |  |                         |  |                               |       |                                     |      |                         |   |          



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Option valuation models require the input of highly subjective assumptions. Because the Companys
employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in managements opinion, the existing
models do not necessarily provide a representative single measure of the fair value at which transactions may occur. The assumptions used to value stock options granted during the first quarter of 2007 were as follows: risk-free interest rate of
4.68%, volatility of 18.40%, dividend yield of 3.33%, and expected option term of 1.88 years. Expected volatility is based on historical volatility of the Companys traded shares. The expected term is calculated by the lattice option pricing
model using assumptions regarding the contractual term of the stock options, vesting periods, the exercise price to market stock price multiple experienced by the Company, and the historical employee exit rate. The stock options granted during the
first quarter of 2007 were the result of a reload feature on stock options that had a remaining contractual life of 1.88 years.

The
weighted-average grant-date fair value of stock options granted during the quarters ended March 31, 2007 and 2006 was $1.24 and $1.32, respectively. The total intrinsic value at grant date of stock options exercised during the quarters ended
March 31, 2007 and 2006 was $8,329 and $250,050, respectively. Cash received from stock option exercises for the quarters ended March 31, 2007 and 2006 was $58,902 and $196,107, respectively. The excess tax benefit realized for the tax
deductions from option exercises totaled $9,428 and $189,558, respectively, for the quarters ended March 31, 2007 and 2006. The Company has a policy of issuing new shares to satisfy stock option exercises and as of March 31, 2007 there
were 2,300,975 shares available under the existing stock incentive plan that was approved by shareholders. However, shares may be repurchased in open market or privately negotiated transactions under certain circumstances. As of March 31, 2007,
there was $398,868 of unrecognized compensation cost related to non-vested stock options. That cost is expected to be recognized over a weighted average period of 4.13 years.

As of March 31, 2007, the Company had granted non-vested shares of common stock to certain directors and employees as part of incentive programs and
to those directors who elected to use deferred directors fees to purchase non-vested shares of common stock. Non-vested shares of common stock awarded to employees and directors as part of incentive programs have vesting schedules that range
from four to nine years and are expensed over the same schedules. Non-vested shares of common stock issued to directors as a method of deferring their directors fees are expensed at the time the fees are earned by the director. A summary of
the Companys non-vested share activity and related information for the three months ended March 31, 2007 is as follows:



|                             |  |                 |  |                                       |      
|---------------------------- |  | --------------- |  | ------------------------------------- | -----
|                             |  | Number ofShares |  | Weighted-AverageGrant-Date Fair Value
|Balance at December 31, 2006 |  | 47,176          |  | $                                     | 10.76
|Granted                      |  | 10,364          |  |                                       | 12.00
|Vested                       |  |                |  |                                       |     
|                             |  |                 |  |                                       |      
|Balance at March 31, 2007    |  | 57,540          |  | $                                     | 10.98
|                             |  |                 |  |                                       |      

As of March 31, 2007, there was $241,269 of total unrecognized compensation cost related to
non-vested shares of common stock. That cost is expected to be recognized over a weighted-average period of 4.89 years.

NOTE C  INVESTMENT
SECURITIES

The amortized cost and estimated fair values of investment securities available-for-sale were:



|                                    |  |                |            |                     |   |               |  |                     |            |  |   |           
|----------------------------------- |  | -------------- | ---------- | ------------------- | - | ------------- |  | ------------------- | ---------- |  | - | ----------
|                                    |  | March 31, 2007 |            | December 31, 2006  
|                                    |  | AmortizedCost  |            | EstimatedFair Value |   | AmortizedCost |  | EstimatedFair Value
|U.S. Agency securities              |  | $              | 52,954,013 |                     | $ | 52,523,750    |  | $                   | 54,954,164 |  | $ | 54,309,219
|U.S. Treasury securities            |  |                | 100,000    |                     |   | 99,090        |  |                     | 100,000    |  |   | 98,539    
|Mortgage-backed securities          |  |                | 707,796    |                     |   | 704,690       |  |                     | 711,561    |  |   | 706,682   
|Equity securities                   |  |                | 472,500    |                     |   | 448,000       |  |                     | 472,500    |  |   | 455,000   
|                                    |  |                |            |                     |   |               |  |                     |            |  |   |           
|Total securities available-for-sale |  | $              | 54,234,309 |                     | $ | 53,775,530    |  | $                   | 56,238,225 |  | $ | 55,569,440
|                                    |  |                |            |                     |   |               |  |                     |            |  |   |           



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NOTE D  LOANS

Major classifications of loans are summarized as follows:



|                                     |  |                |             |   |                   |   |             |  
|------------------------------------ |  | -------------- | ----------- | - | ----------------- | - | ----------- | -
|                                     |  | March 31, 2007 |             |   | December 31, 2006 |  
|Commercial                           |  | $              | 95,501,706  |   |                   | $ | 72,132,578  |  
|Construction                         |  |                | 126,263,700 |   |                   |   | 116,812,110 |  
|Real estate-commercial mortgage      |  |                | 137,393,969 |   |                   |   | 140,259,912 |  
|Real estate-residential mortgage     |  |                | 34,583,805  |   |                   |   | 25,522,729  |  
|Installment loans to individuals     |  |                | 10,987,108  |   |                   |   | 20,599,390  |  
|Deferred loan fees and related costs |  |                | (351,390    | ) |                   |   | (282,558    | )
|                                     |  |                |             |   |                   |   |             |  
|Total loans                          |  | $              | 404,378,898 |   |                   | $ | 375,044,161 |  
|                                     |  |                |             |   |                   |   |             |  

Non-performing assets were as follows:



|                                                   |  |                |           |                   |   |          
|-------------------------------------------------- |  | -------------- | --------- | ----------------- | - | ---------
|                                                   |  | March 31, 2007 |           | December 31, 2006
|Loans 90 days past due and still accruing interest |  | $              | 75,196    |                   | $ |         
|Nonaccrual loans                                   |  |                | 1,583,408 |                   |   | 1,629,990
|Real estate aquired in settlement of loans         |  |                |          |                   |   |         
|                                                   |  |                |           |                   |   |          
|Total non-performing assets                        |  | $              | 1,658,604 |                   | $ | 1,629,990
|                                                   |  |                |           |                   |   |          

Information on impaired loans was as follows:



|                                                                                 |  |                |           |                   |   |          
|-------------------------------------------------------------------------------- |  | -------------- | --------- | ----------------- | - | ---------
|                                                                                 |  | March 31, 2007 |           | December 31, 2006
|Impaired loans for which an allowance has been provided                          |  | $              | 1,808,408 |                   | $ | 1,854,990
|Impaired loans for which no allowance has been provided                          |  |                |          |                   |   |         
|                                                                                 |  |                |           |                   |   |          
|Total impaired loans                                                             |  | $              | 1,808,408 |                   | $ | 1,854,990
|                                                                                 |  |                |           |                   |   |          
|Allowance provided for impaired loans, included in the allowance for loan losses |  | $              | 429,682   |                   | $ | 438,998  
|                                                                                 |  |                |           |                   |   |          
|Average balance in impaired loans                                                |  | $              | 1,833,363 |                   | $ | 1,936,082
|                                                                                 |  |                |           |                   |   |          
|Interest income recognized from impaired loans                                   |  | $              | 6,115     |                   | $ | 1,026    
|                                                                                 |  |                |           |                   |   |          

NOTE E  ALLOWANCE FOR LOAN LOSSES

Transactions affecting the allowance for loan losses during the three months ended March 31, 2007 and 2006 were as follows:



|                               |  |      |           |      |   |           |  
|------------------------------ |  | ---- | --------- | ---- | - | --------- | -
|                               |  | 2007 |           | 2006 |  
|Balance at beginning of period |  | $    | 3,910,943 |      | $ | 3,597,497 |  
|Provision for loan losses      |  |      | 222,000   |      |   |          |  
|Loans charged off              |  |      |          |      |   | (50,414   | )
|Recoveries                     |  |      | 759       |      |   | 169,915   |  
|                               |  |      |           |      |   |           |  
|Balance at end of period       |  | $    | 4,133,702 |      | $ | 3,716,998 |  
|                               |  |      |           |      |   |           |  



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NOTE F  PREMISES AND EQUIPMENT

Premises and equipment consisted of the following:



|                                               |  |                |            |   |                   |   |            |  
|---------------------------------------------- |  | -------------- | ---------- | - | ----------------- | - | ---------- | -
|                                               |  | March 31, 2007 |            |   | December 31, 2006 |  
|Land                                           |  | $              | 4,321,466  |   |                   | $ | 4,321,467  |  
|Buildings and improvements                     |  |                | 6,008,298  |   |                   |   | 6,008,298  |  
|Leasehold improvements                         |  |                | 826,413    |   |                   |   | 820,694    |  
|Equipment, furniture and fixtures              |  |                | 5,216,603  |   |                   |   | 5,178,374  |  
|                                               |  |                |            |   |                   |   |            |  
|                                               |  |                | 16,372,780 |   |                   |   | 16,328,833 |  
|Less accumulated depreciation and amortization |  |                | (4,369,966 | ) |                   |   | (4,144,949 | )
|                                               |  |                |            |   |                   |   |            |  
|Premises and equipment, net                    |  | $              | 12,002,814 |   |                   | $ | 12,183,884 |  
|                                               |  |                |            |   |                   |   |            |  

NOTE G  SUPPLEMENTAL RETIREMENT AGREEEMENTS

The Company has entered into supplemental retirement agreements with several key officers and recognizes expense each year related to these agreements
based on the present value of the benefits expected to be provided to the employees and any beneficiaries. The expense recognized during the first three months of 2007 and 2006 was $128,096 and $112,848, respectively.

ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion provides information about the important factors affecting the consolidated results of operations, financial condition, capital resources and liquidity of the Company. This report identifies trends and material
changes that occurred during the reporting periods and should be read in conjunction with the 2006 Form 10-K.

Financial Condition

Total average assets, a benchmark used by banks when comparing size, are the strongest indicator of our continuous growth. Average assets increased $81.5
million, or 20.2%, to a new high of $484.5 million for the three months ended March 31, 2007 compared to the three months ended March 31, 2006. Total assets at March 31, 2007 were $501.7 million, an increase of $25.4 million, or 5.3%,
over December 31, 2006 total assets of $476.3 million.

As a community bank, the Company has a primary objective of meeting the
business and consumer credit needs within its market where standards of profitability, client relationships and credit quality can be met. The loan portfolio grew $29.3 million, or 7.8%, to $404.4 million as of March 31, 2007 compared to
December 31, 2006.

The Company continuously reviews its loan portfolio and maintains an allowance for loan losses sufficient to
absorb losses inherent in the portfolio. In addition to the review of credit quality through ongoing credit review processes, the Company conducts an independent and comprehensive allowance analysis of its loan portfolio at least quarterly. The
allowance for loan losses was $4.1 million, or 1.02% of outstanding loans, as of March 31, 2007 compared with $3.9 million, or 1.04% of outstanding loans, as of December 31, 2006. Management considers the allowance for loan losses to be
adequate.

The Companys investment portfolio consists primarily of available-for-sale U.S. Agency, U.S. Treasury and mortgage-backed
securities. At March 31, 2007, the estimated market value of investment securities held by the Company was $53.8 million, down $1.8 million or 3.2%, from $55.6 million at December 31, 2006. The decrease was the result of maturities of
investment securities with a par value of $2.0 million netted against the change in unrealized gains or losses on available-for-sale investment securities and unamortized premiums on the remaining investment securities.

Deposits are a source of the Companys funds for use in lending and general business purposes. The Companys balance sheet growth is largely
determined by the availability of deposits in its market, the cost of attracting the deposits, and the prospects of profitably utilizing the available deposits by increasing the loan or investment portfolios. Total deposits at March 31, 2007
increased $10.8 million, or 3.0%, to $374.0 million compared to December 31, 2006. Significant changes in the deposit categories include a decrease of $1.2 million or 2.8% in interest bearing demand deposits and an increase of $2.2 million or
2.9% in savings accounts from



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##### Table of Contents

December 31, 2006 to March 31, 2007. Total time deposits increased $9.0 million, or 6.0% from December 31, 2006 to March 31, 2007. The
increase in time deposits was a result of efforts by the Company to remain competitive in its market by increasing rates offered on time deposits.

Results of Operations

During the first three months of 2007, the Company had net income of $1.5 million, an increase of
16.1% over net income of $1.3 million in the first three months of 2006. The increase in net income in the first quarter of 2007 was driven largely by strong loan growth in a rising interest rate environment. Return on average total assets for the
first three months of 2007 decreased to 1.28% from 1.33% for the first three months of 2006 as a result of the higher cost of funding in a rising interest rate environment. Return on average shareholders equity decreased in the first three
months of 2007 to 8.82% from 11.02% for the first three months of 2006 due to an increase in average shareholders equity of $21.9 million over the comparable period in 2006. Diluted earnings per share decreased 6.3% to $0.15 per share for the
first three months of 2007 compared to $0.16 per share for the first three months of 2006. The decrease in diluted earnings per share reflected the issuance of 1,849,200 shares of common stock in the third quarter of 2006.

Net interest income, the principal source of income for the Company, represents interest and fees earned from lending and investment activities less the
interest paid to fund these activities. Variations in the volume and mix of interest earning assets and interest bearing liabilities, changes in the yields earned and the rates paid, and the level of noninterest bearing liabilities available to
support earning assets, all impact net interest income. Net interest income for the first three months of 2007 was $5.7 million, an $852 thousand or 17.7% increase over the first three months of 2006.

The net interest margin, which is calculated by expressing net interest income as a percentage of average interest earning assets, is an indicator of
effectiveness in generating income from earning assets. The Companys net interest margin decreased from 5.24% during the first three months of 2006 to 5.06% for the same period in 2007 due to the higher cost of funding loan growth. During the
fourth quarter of 2006, the net interest margin was 5.03%, indicating that the margin decline had stabilized during the first quarter of 2007.

The Companys interest earning assets consist primarily of loans, investment securities, interest-bearing deposits in other banks, and overnight funds sold. Interest income on loans, including fees, increased $2.3 million to $8.1
million for the three months ended March 31, 2007 compared to the same time period during 2006. This increase resulted from the 42 basis point increase experienced in the average interest yield along with the $99.0 million increase in the
average loan balance. Interest income on investment securities decreased $118 thousand to $615 thousand for the three months ended March 31, 2007 compared to the same time period during 2006. The $16.6 million decrease in the average investment
securities balance netted against a 30 basis point increase in the average interest yield produced this decrease. Interest income on interest-bearing deposits in other banks increased $16 thousand for the three months ended March 31, 2007
compared to the same time period during 2006. This increase was the result of the 78 basis point increase in the average interest yield along with a $1.1 million increase in average interest-bearing deposits in other banks. Interest income on
overnight funds sold decreased $17 thousand to $23 thousand for the three months ended March 31, 2007 compared to the same time period during 2006. This decrease was due to the $1.8 million decrease in average overnight funds sold partially
offset by the 73 basis point increase experienced in the average interest yield.

The Companys interest bearing liabilities consist
of deposit accounts and other borrowings. Interest expense from deposits increased $1.2 million to $2.6 million for the three months ended March 31, 2007 compared to the same time period during 2006. This increase resulted from the 126 basis
point increase experienced in the average interest rate on interest bearing deposits, as well as the $52.5 million increase in the average interest bearing deposits. Interest expense from other borrowings, which consists of FHLB borrowings and
overnight funds purchased, increased $181 thousand to $447 thousand for the three months ended March 31, 2007 compared to the same time period during 2006. The $9.2 million increase in average other borrowings and the 104 basis point increase
in the average interest rate produced this result.

During the first three months of 2007, the Company recorded loan recoveries of $1
thousand and a provision for loan losses in the amount of $222 thousand. The Company did not record any loan charge-offs in the first quarter of 2007. During the first three months of 2006, the Company recorded loan recoveries to the allowance for
loan losses in the amount of $170 thousand and loan charge-offs in the amount of $50 thousand. As a result of the loan recoveries and after the quarterly analysis of the allowance for loan losses, the Company determined that no provision for loan
losses was necessary for the first quarter of 2006.



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The Company reported an increase in total noninterest income of $10 thousand, or 1.0%, for the first
three months of 2007 compared to the same period in 2006. Service charges on deposit accounts, the Companys primary source of noninterest income, increased $33 thousand or 7.2% to $488 thousand for the first three months of 2007 compared to
the same period in 2006. Other service charges and fees decreased $23 thousand, or 5.1%, for the first three months of 2007 compared to the first three months of 2006. Noninterest income comprised 9.6% of total revenue in the first three months of
2007 compared with 12.3% in the first three months of 2006.

Noninterest expense represents the overhead expenses of the Company. Total
noninterest expense increased $323 thousand, or 8.7%, for the first three months of 2007 compared to the first three months of 2006. This increase was partially attributable to a 17.1% increase in salaries and employee benefits resulting from normal
annual salary adjustments and increases in certain employee benefit costs, including stock-based compensation. Occupancy expense increased to $414 thousand for the three months ended March 31, 2007 compared to $402 thousand for the same time
period in 2006. Data processing expense, another category of noninterest expense, posted an increase of 9.9% for the first three months of 2007 compared to the first three months of 2006, which reflected increases in the cost of data processing
supplies and software maintenance. Other noninterest expenses posted a decrease of 7.7% to $907 thousand for the first three months of 2007 compared to the same time period during 2006. The ratio of annualized noninterest expense to average total
assets was 3.38% for the first three months of 2007 compared to 3.73% for the first three months of 2006.

Income tax expense for the first
quarters of 2007 and 2006 was $789 thousand and $686 thousand, respectively. The Companys effective tax rate was 34.0% and 34.2% in 2007 and 2006, respectively, and differed from the statutory rate of 34.0% due primarily to nondeductible
expenses.

Capital Resources and Liquidity

Total shareholders equity increased $876 thousand, or 1.3%, to $71.0 million at March 31, 2007 compared to $70.2 million at December 31, 2006. As of March 31, 2007, the Company and the Bank were considered
well-capitalized, the highest category of capitalization defined by the Federal Reserve Bank (the FRB). The Company continually monitors current and projected capital adequacy positions of both the Company and the Bank.
Maintaining adequate capital levels is integral to providing stability to the Company, resources to achieve the Companys growth objectives, and returns to the shareholders in the form of dividends.

A key goal of asset/liability management is to maintain an adequate degree of liquidity without impairing long-term earnings. Liquidity represents the
Companys ability to meet present and future financial obligations through either the sale or maturity of existing assets or the acquisition of additional funds through liability management. Short-term liquidity is provided primarily by access
to the federal funds market through established correspondent banking relationships. Funds also can be obtained through the Companys borrowing privileges at the FRB and the Federal Home Loan Bank (the FHLB). Additional liquidity is
available through loan repayments and maturities of the Companys investment portfolio. The Company maintains a very liquid portfolio of both assets and liabilities and attempts to mitigate the risk inherent in changing rates in this manner.
Management believes that the Company maintains overall liquidity sufficient to satisfy its depositors requirements and to meet its customers credit needs.

Off  Balance Sheet Arrangements

The Company is a party to financial instruments with
off-balance sheet risk in the normal course of business to meet the financing needs of its customers. For more information on the Companys off-balance sheet arrangements, see Note 8 of the Notes to Consolidated Financial Statements contained
in the 2006 Form 10-K.

Contractual Obligations

The Companys contractual obligations consist of FHLB borrowings, time deposits, and operating lease obligations. FHLB borrowings increased to $50.5 million at March 31, 2007 compared to $38.0 million at December 31, 2006.

Critical Accounting Policies

General

U.S. generally accepted accounting principles are complex and require management to apply significant judgment to various accounting,
reporting, and disclosure matters. Management must use assumptions, judgments, and estimates when applying these principles where precise measurements are not possible or practical. These policies are critical because they are highly dependent upon
subjective or complex judgments, assumptions and estimates. Changes in such judgments, assumptions and estimates may have a significant impact on the consolidated financial statements. Actual results, in fact, could differ from those estimates.



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Our single most critical accounting policy relates to our allowance for loan losses, which reflects the
estimated losses resulting from the inability of our borrowers to make required loan payments. The allowance for loan losses is established through a provision for loan losses charged to expense. Loans are charged against the allowance for loan
losses when management believes that collectibility of the principal is unlikely. Subsequent recoveries, if any, are credited to the allowance.

The allowance is an amount that management believes will be adequate to absorb estimated losses relating to specifically identified loans, as well as probable credit losses inherent in the balance of the loan portfolio, based on an
evaluation of the collectibility of existing loans and prior loss experience. This evaluation also takes into consideration such factors as changes in the nature and volume of the loan portfolio, overall portfolio quality, credit concentrations,
trends in historical loss experience, review of specific problem loans, and current economic conditions.

The allowance consists of
specific, general, and unallocated components. The specific component relates to loans that are classified as impaired, doubtful, substandard or special mention. The general component covers non-classified loans and is based on historical loss
experience adjusted for qualitative factors. An unallocated component is maintained to cover uncertainties that could affect managements estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision
inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio.

A loan is
impaired when it is probable the creditor will be unable to collect all contractual principal and interest payments due in accordance with the terms of the loan agreement. Impaired loans are measured based on the present value of payments expected
to be received, using the historical effective loan rate as the discount rate. Alternatively, measurement also may be based on observable market prices or, for loans that are solely dependent on the collateral for repayment, measurement may be based
on the fair value of the collateral. The Company does not aggregate loans for risk classification. Loans that are to be foreclosed are measured based on the fair value of the collateral. If the recorded investment in the impaired loan exceeds the
measure of fair value, a valuation allowance is established as a component of the allowance for loan losses. Changes in the allowance for loan losses relating to impaired loans are charged or credited to the provision for loan losses.

Future Accounting Pronouncements

SFAS No. 157,
Fair Value Measurements, defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. The
adoption of this statement is not expected to have a material effect on financial condition or the results of operations.

SFAS
No. 159, The Fair Value Option for Financial Assets and Financial Liabilities  Including an Amendment of FASB Statement No. 115, permits entities to choose to measure many financial instruments and certain other items at fair
value. This statement is effective as of the beginning of an entitys first fiscal year that begins after November 15, 2007. The adoption of this statement is not expected to have a material effect on financial condition or the results of
operations.

Forward-Looking Statements

Where appropriate, statements in this report may contain the insights of management into known events and trends that have or may be expected to have a material effect on our operations and financial condition. The information presented may
also contain certain forward-looking statements regarding future financial performance, which are not historical facts and which involve various risks and uncertainties.

When or if used in this quarterly report or any Securities and Exchange Commission filings, or other public or shareholder communications, or in oral statements made with the approval of an authorized executive
officer, the words or phrases anticipate, would be, will allow, intends to, will likely result, are expected to, will continue, is anticipated, is
estimated, is projected, or similar expressions are intended to identify forward-looking statements.

For a
discussion of the risks, uncertainties and assumptions that could affect these statements and our future events, developments or results, you should carefully review the risk factors summarized below and the more detailed discussions in the
Risk Factors and Business sections in the 2006 Form 10-K. Our risks include, without limitation, the following:



| |  |  | Our dependence on key personnel;
| | - |  | --------------------------------



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| |  |  | The high level of competition within the banking industry;
| | - |  | ----------------------------------------------------------



| |  |  | Our dependence on construction and land development loans that could be negatively affected by a downturn in the real estate market;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The adequacy of our estimate for known and inherent losses in our loan portfolio;
| | - |  | ---------------------------------------------------------------------------------



| |  |  | Changes in interest rate;
| | - |  | -------------------------



| |  |  | Our ability to manage our growth;
| | - |  | ---------------------------------



| |  |  | Governmental and regulatory changes that may adversely affect our expenses and cost structure;
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | The threat from technology based frauds and scams; and
| | - |  | ------------------------------------------------------



| |  |  | Our ability to use the proceeds from our recent offerings profitably.
| | - |  | ---------------------------------------------------------------------

Our forward-looking statements could be wrong in light of these and other risks, uncertainties and assumptions. The future events, developments or
results described in this report could turn out to be materially different. We have no obligation to publicly update or revise our forward-looking statements after the date of this quarterly report and you should not expect us to do so.

ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Companys primary market
risk is exposure to interest rate volatility. Fluctuations in interest rates will impact both the level of interest income and interest expense and the market value of the Companys interest earning assets and interest bearing liabilities.

The primary goal of the Companys asset/liability management strategy is to optimize net interest income while limiting exposure to
fluctuations caused by changes in the interest rate environment. The Companys ability to manage its interest rate risk depends generally on the Companys ability to match the maturities and re-pricing characteristics of its assets and
liabilities while taking into account the separate goals of maintaining asset quality and liquidity and achieving the desired level of net interest income.

The Companys management, guided by the Asset/Liability Committee, determines the overall magnitude of interest sensitivity risk and then formulates policies governing asset generation and pricing, funding
sources and pricing, and off-balance sheet commitments. These decisions are based on managements expectations regarding future interest rate movements, the state of the national and regional economy, and other financial and business risk
factors.

The primary method that the Company uses to quantify and manage interest rate risk is simulation analysis, which is used to model
net interest income from assets and liabilities over a specified time period under various interest rate scenarios and balance sheet structures. This analysis measures the sensitivity of net interest income over a relatively short time horizon. Key
assumptions in the simulation analysis relate to the behavior of interest rates and spreads, the changes in product balances and the behavior of loan and deposit customers in different rate environments.

The expected effect on net interest income for the twelve months following March 31, 2007 and December 31, 2006 due to a shock in interest
rates is shown below. These estimates are dependent on material assumptions, such as those previously discussed.



|                          |  |                               |        |   |                               |        |   |        |   |        |   |  |        |  
|------------------------- |  | ----------------------------- | ------ | - | ----------------------------- | ------ | - | ------ | - | ------ | - |  | ------ | -
|                          |  | March 31, 2007                |        |   | December 31, 2006             |       
|(in thousands)            |  | Change in Net Interest Income |        |   | Change in Net Interest Income |       
|                          |  | Amount                        |        |   | %                             |        |   | Amount |   |        | % | 
|Change in Interest Rates: |  |                               |        |   |                               |        |   |        |   |        |   |  |        |  
|+200 basis points         |  | $                             | 3,783  |   |                               | 15.93  | % |        | $ | 3,130  |   |  | 14.12  | %
|+ 100 basis points        |  |                               | 1,892  |   |                               | 7.97   | % |        |   | 1,561  |   |  | 7.04   | %
|- 100 basis points        |  |                               | (1,894 | ) |                               | -7.98  | % |        |   | (1,567 | ) |  | -7.06  | %
|- 200 basis points        |  |                               | (3,791 | ) |                               | -15.96 | % |        |   | (3,141 | ) |  | -14.17 | %

A decrease in interest rates would reduce the Companys net interest income, while an
increase would tend to increase the Companys net interest income. Thus, the Companys interest rate sensitivity position is asset-sensitive. It should be noted, however, that the simulation analysis is based upon equivalent changes in
interest rates for all categories of assets and liabilities.



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In normal operating conditions interest rate changes rarely occur in such a uniform manner. Many factors affect the timing and magnitude of interest rate
changes on financial instruments. Consequently, variations should be expected from the projections resulting from the controlled conditions of the simulation analysis.

The Company had no derivative financial instruments, foreign currency exposure, or trading portfolio as of March 31, 2007.

ITEM 4  CONTROLS AND PROCEDURES

As of March 31, 2007, the Company carried out an evaluation,
under the supervision and with the participation of the Companys management, including the Companys Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Companys disclosure
controls and procedures pursuant to Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the
Companys disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Companys Exchange Act filings. In
addition, no change in its internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) occurred during the quarter ended March 31, 2007 that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.

PART II  OTHER INFORMATION

ITEM 1  LEGAL PROCEEDINGS

In the ordinary course of operations, the Company may become a party to
legal proceedings. Currently, the Company is not party to any material legal proceedings.

ITEM 1A  RISK FACTORS

There have been no material changes from the risk factors as previously
disclosed in the registrants 2006 Form 10-K.

ITEM 2  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The Company announced an open
ended program in 2003 by which management was authorized to repurchase an unlimited number of shares of the Companys common stock in open market and privately negotiated transactions. During the first three months of 2007, the Company
repurchased 66,561 shares of its common stock in open market and privately negotiated transactions. Detail for the share repurchase transactions conducted during the first quarter of 2007 appears below.



|                                              |  |                                |  |                              |  |                                                                                  |  |                                                                              
|--------------------------------------------- |  | ------------------------------ |  | ---------------------------- |  | -------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------
|Period                                        |  | Total Numberof SharesPurchased |  | Average Price Paid Per Share |  | Total Number of Shares Purchased as Part of
Publicly Announced Plans or Programs |  | Maximum Number of Shares that MayYet be Purchased Under the Plans or Programs
|Month #1 January 1, 2007 - January 31, 2007   |  |                               |  |                             |  |                                                                                 |  |                                                                             
|                                              |  |                                |  |                             
|Month #2 February 1, 2007 - February 28, 2007 |  | 23,637                         |  | $12.45                       |  | 23,637                                                                           |  |                                                                             
|                                              |  |                                |  |                             
|Month #3 March 1, 2007 - March 31, 2007       |  | 42,924                         |  | $13.03                       |  | 42,924                                                                           |  |                                                                             
|                                              |  |                                |  |                             
|Total                                         |  | 66,561                         |  | $12.82                       |  | 66,561                                                                           |  |                                                                             



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ITEM 3  DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There was no submission of matters to a
vote of security holders during the first quarter of 2007.

ITEM 5  OTHER INFORMATION

None.

ITEM 6  EXHIBITS



|     |  |                                                                                                                                                                                                                                              
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1  |  | Articles of Incorporation of Hampton Roads Bankshares, Inc., attached as Exhibit 3.1 to the Registrants Current Report on Form 8-K dated July 2, 2001, incorporated herein by
reference.                                                    
|     | 
|3.2  |  | Bylaws of Hampton Roads Bankshares, Inc., as amended, attached as Exhibit 3.2 to the Registrants Annual Report on Form 10-K for the year ended December 31, 2002, incorporated herein by
reference.                                         
|     | 
|3.3  |  | Amendment to Bylaws of Hampton Roads Bankshares, Inc., attached as Exhibit 99.1 to the Registrants Current Report on Form 8-K dated July 25, 2006, incorporated herein by
reference.                                                        
|     | 
|4.1  |  | Specimen of Common Stock Certificate, attached as Exhibit 4.1 to the Registrants Annual Report on Form 10-K for the year ended December 31, 2005, incorporated herein by
reference.                                                         
|     | 
|10.1 |  | Hampton Roads Bankshares, Inc. Executive Savings Plan, amended and restated effective July 23, 2006, attached as Exhibit 4.5 to the Registrants Registration Statement on Form S-8 dated
January 12, 2007, incorporated herein by reference.
|     | 
|31.1 |  | The Rule 13a-14(a)/15d-14(a) certification of Jack W. Gibson is filed herewith.                                                                                                                                                              
|     | 
|31.2 |  | The Rule 13a-14(a)/15d-14(a) certification of Donald W. Fulton, Jr. is filed herewith.                                                                                                                                                       
|     | 
|32.1 |  | The Section 1350 certifications of Jack W. Gibson and Donald W. Fulton, Jr. are filed herewith.                                                                                                                                              



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly authorized.



|                  |  |                                                             
|----------------- |  | ------------------------------------------------------------
|                  |  | HAMPTON ROADS BANKSHARES, INC.                              
|                  |  | (Registrant)                                                
|                  | 
|DATE: May 9, 2007 |  |                                                             
|                  |  | /s/ Donald W. Fulton, Jr.                                   
|                  |  | Donald W. Fulton, Jr.                                       
|                  |  | Senior Vice President and Chief Financial Officer           
|                  |  | (On behalf of the Registrant as principal financial officer)



17