EX-99.1 2 hr8644ex991.txt EXHIBIT 99.1 Exhibit 99.1 19TH YEAR OF RECORD EARNINGS REPORTED BY HAMPTON ROADS BANKSHARES NORFOLK, Va., Jan. 24 /PRNewswire-FirstCall/ -- Hampton Roads Bankshares, Inc. (Nasdaq: HMPR), the financial holding company for Bank of Hampton Roads, today announced its financial results for the fourth quarter and year ended December 31, 2006. Fourth quarter 2006 was the highest earning quarter in the history of the company with net income of $1,621,973, an increase of 8.46% over the comparable period in 2005. Net income for the year was a record $6,035,539, up $528,210 or 9.59% from 2005. Diluted earnings per share for the fourth quarter of 2006 was $0.16 compared with $0.18 in the fourth quarter of 2005. For the twelve months, diluted earnings per share was $0.65 in 2006 compared to $0.66 in 2005. Earnings per share comparisons were affected by a greater number of shares outstanding in the 2006 periods. In the third quarter of 2006, the company raised approximately $19 million in new capital through a fully subscribed rights offering of 670,000 shares of common stock and a fully subscribed public offering of 1,179,200 shares of common stock. Profitability ratios for the fourth quarter and the year remained strong, but were impacted by the increased capital. Return on average assets was 1.37% for the fourth quarter of 2006 and 1.39% for the year. Since 1993, this ratio has consistently exceeded 1.20% for each year. Return on average shareholders' equity was 9.30% in the fourth quarter of 2006 and 10.47% for the year. At December 31, 2006, total assets were $476,299,468, an increase of 16.31% over year-end 2005. Asset growth during 2006 was driven by a record $89,714,226 or 31.44% increase in the company's loan portfolio; total loans ended the year at an all-time high of $375,044,161. Deposits increased 10.94% during 2006 to end the year at a record $363,261,329; $97,559,421 or 26.86% of the company's total deposits are in the form of non-interest bearing demand deposit accounts and provide a low-cost source of funding for loans and other investments. Compared to the same periods in 2005, net interest income increased 11.82% for the year to $20,897,986 and 1.78% for the fourth quarter to $5,552,340. Net interest margin decreased slightly from 5.26% at December 31, 2005 to 5.20% at December 31, 2006. Net interest margins throughout the industry are shrinking due to the increased cost of funding loan growth. Non-interest expense increased 14.61% for the year and was virtually even with last year for the fourth quarter. The year-over-year increase was attributable to several factors, including higher employee benefits expense related to incentive programs designed to attract business and increased salary expense related to an increase in the number of employees and normal salary increases. In addition, the company incurred higher occupancy expense due primarily to the addition of two branch offices in 2005, the new corporate headquarters, and renovations at a number of branch locations. The company's credit quality continues to be strong. The nonperforming assets to total assets ratio was 0.34% on December 31, 2006, down 10 basis points from 0.44% on December 31, 2005. Net recoveries in 2006 totaled $133,446 compared to $40,897 in 2005. Because of the high level of recoveries and the strength of other measures of credit quality, the company's provision for loan losses was lower in 2006 than it was in 2005. At December 31, 2006, the company's allowance for loan losses was $3,910,943 compared to $3,597,497 at December 31, 2005, which is 1.04% of total loans at December 31, 2006. Company President and Chief Executive Officer Jack W. Gibson commented, "Our company has done extremely well since opening in 1987 and 2006 marked our best performance yet. It was our 19th consecutive year of record earnings. In addition to meeting the financial goals and objectives we set for the year, we devoted a significant amount of time and effort to strategic planning. The additional capital raised through the stock offering will help support our future growth and expansion and allows the bank to accommodate the financing needs of some of our larger, well-qualified borrowers." The company's immediate expansion plans include a new Bank of Hampton Roads branch in the Edinburgh retail development in Chesapeake. The bank purchased a prime outparcel in the Edinburgh Commons North Shopping Center anchored by Target. Edinburgh is a 200 acre, 850,000 square foot commercial retail development that features a mix of national and specialty retailers, restaurants and services. The bank will open this year in a temporary facility near the site during construction of the branch. "During the third quarter of 2006, we listed our stock on the Nasdaq Capital Market to provide greater visibility for our shares and to introduce our stock to the national capital markets," said Gibson. "Since listing, we feel the investment community has responded favorably to our stock." On December 1, 2006, Hampton Roads Bankshares was selected for inclusion in the America's Community Bankers Nasdaq Index, ticker symbol ACBQ. Gibson said, "Our relationship with Nasdaq and America's Community Bankers offers us many opportunities to introduce our company to analysts and investors outside of our market." About Hampton Roads Bankshares Hampton Roads Bankshares, Inc. is a financial holding company that was formed in 2001 and is headquartered in Norfolk, Virginia. The Company's primary subsidiary is Bank of Hampton Roads, which opened for business in 1987. The Bank engages in general community and commercial banking business, targeting the needs of individuals and small to medium-sized businesses. Currently, the Bank operates 17 banking offices in the Hampton Roads region of southeastern Virginia and is scheduled to open another this year. Shares of Hampton Roads Bankshares common stock are traded on the Nasdaq Capital Market under the symbol HMPR. Additional information about the Company and its subsidiaries can be found on the Web at http://www.bankofhamptonroads.com. Hampton Roads Bankshares, Inc. Financial Highlights Unaudited

Three Months Ended --------------------------------------------- Dec. 31, 2006 Dec. 31, 2005 % Change ------------- ------------- ------------- Operating Results Interest income $ 8,448,531 $ 7,097,244 19.04% Interest expense 2,896,191 1,641,748 76.41% Net interest income 5,552,340 5,455,496 1.78% Provision for loan losses 90,000 -- -- Noninterest income 830,016 683,966 21.35% Noninterest expense 3,830,364 3,866,504 -0.93% Income taxes 840,019 777,521 8.04% Net income $ 1,621,973 $ 1,495,437 8.46% Earnings per share: Basic $ 0.16 $ 0.18 -11.11% Diluted 0.16 0.18 -11.11% Book value per share 6.84 5.96 14.77% Balance Sheet at Period-End Total loans $ 375,044,161 $ 285,329,935 31.44% Total securities 59,544,690 73,825,659 -19.34% Total deposits 363,261,329 327,446,518 10.94% Other borrowings 38,000,000 30,500,000 24.59% Shareholders' equity 70,162,543 49,130,529 42.81% Total assets 476,299,468 409,517,283 16.31% Daily Averages Total loans $ 360,965,976 $ 285,108,763 26.61% Total securities 60,549,314 67,275,002 -10.00% Total deposits 354,986,638 320,553,185 10.74% Other borrowings 38,000,000 30,500,000 24.59% Shareholders' equity 69,228,309 46,509,360 48.85% Interest-earning assets 438,199,849 374,229,016 17.09% Interest-bearing liabilities 294,904,030 245,655,736 20.05% Total assets 468,408,609 402,490,149 16.38% Financial Ratios Return on average assets 1.37% 1.47% (0.10) Return on average equity 9.30% 12.76% (3.46) Net interest margin 5.03% 5.78% (0.75) Efficiency ratio 60.01% 62.98% (2.97)

Three Months Ended --------------------------------------------- Dec. 31, 2006 Dec. 31, 2005 % Change ------------- ------------- ------------- Allowance for Loan Losses Beginning balance $ 3,821,464 $ 3,516,341 8.68% Provision for losses 90,000 -- -- Charge-offs (4,382) (34,992) -87.48% Recoveries 3,861 116,148 -96.68% Ending balance 3,910,943 3,597,497 8.71% Nonperforming Assets Nonaccrual loans $ 1,629,990 $ 1,790,869 -8.98% Loans 90 days past due and still accruing interest -- 30,112 100.00% Other real estate owned -- -- -- Total nonperforming assets 1,629,990 1,820,981 -10.49% Asset Quality Ratios Nonperforming assets to total assets 0.34% 0.44% (0.10) Allowance for loan losses to total loans 1.04% 1.26% (0.22) Allowance for loan losses to nonperforming assets 239.94% 197.56% 42.38

Twelve Months Ended --------------------------------------------- Dec. 31, 2006 Dec. 31, 2005 % Change ------------- ------------- ------------- Operating Results Interest income $ 30,021,271 $ 24,558,111 22.25% Interest expense 9,123,285 5,868,887 55.45% Net interest income 20,897,986 18,689,224 11.82% Provision for loan losses 180,000 486,000 -62.96% Noninterest income 3,397,879 3,214,467 5.71% Noninterest expense 14,945,741 13,040,371 14.61% Income taxes 3,134,585 2,869,991 9.22% Net income $ 6,035,539 $ 5,507,329 9.59% Earnings per share: Basic $ 0.66 $ 0.68 -2.94% Diluted 0.65 0.66 -1.52% Book value per share 6.84 5.96 14.77% Balance Sheet at Period-End Total loans $ 375,044,161 $ 285,329,935 31.44% Total securities 59,544,690 73,825,659 -19.34% Total deposits 363,261,329 327,446,518 10.94% Other borrowings 38,000,000 30,500,000 24.59% Shareholders' equity 70,162,543 49,130,529 42.81% Total assets 476,299,468 409,517,283 16.31% Daily Averages Total loans $ 325,505,725 $ 287,979,238 13.03% Total securities 67,129,591 52,705,560 27.37% Total deposits 333,242,327 302,167,398 10.28% Other borrowings 36,967,808 30,943,521 19.47% Shareholders' equity 57,640,340 44,855,453 28.50% Interest-earning assets 401,953,739 355,000,767 13.23% Interest-bearing liabilities 270,333,404 233,450,020 15.80% Total assets 432,715,790 382,820,912 13.03% Financial Ratios Return on average assets 1.39% 1.44% (0.05) Return on average equity 10.47% 12.28% (1.81) Net interest margin 5.20% 5.26% (0.06) Efficiency ratio 61.52% 59.54% 1.98

Twelve Months Ended --------------------------------------------- Dec. 31, 2006 Dec. 31, 2005 % Change ------------- ------------- ------------- Allowance for Loan Losses Beginning balance $ 3,597,497 $ 3,070,600 17.16% Provision for losses 180,000 486,000 -62.96% Charge-offs (59,118) (98,737) -40.13% Recoveries 192,564 139,634 37.91% Ending balance 3,910,943 3,597,497 8.71% Nonperforming Assets Nonaccrual loans $ 1,629,990 $ 1,790,869 -8.98% Loans 90 days past due and still accruing interest -- 30,112 100.00% Other real estate owned -- -- -- Total nonperforming assets 1,629,990 1,820,981 -10.49% Asset Quality Ratios Nonperforming assets to total assets 0.34% 0.44% (0.10) Allowance for loan losses to total loans 1.04% 1.26% (0.22) Allowance for loan losses to nonperforming assets 239.94% 197.56% 42.38

Certain statements in this report may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that include projections, predictions, expectations, or beliefs about events or results or otherwise are not statements of historical facts. Although the Company believes that its expectations with respect to certain forward-looking statements are based upon reasonable assumptions within the bounds of its existing knowledge of its business and operations, there can be no assurance that actual results, performance or achievements of the Company will not differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Actual future results and trends may differ materially from historical results or those anticipated depending on a variety of factors. For an explanation of the risks and uncertainties associated with forward-looking statements, please refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2005, and other reports filed and furnished to the Securities and Exchange Commission. SOURCE Hampton Roads Bankshares, Inc. -0- 01/24/2007 /CONTACT: Tiffany K. Glenn, Senior Vice President and Marketing Officer of Hampton Roads Bankshares, Inc., +1-757-217-1000/ /Photo: http://www.newscom.com/cgi-bin/prnh/20060608/DCTH075LOGO AP Archive: http://photoarchive.ap.org PRN Photo Desk, photodesk@prnewswire.com/ /Web site: http://www.bankofhamptonroads.com / (HMPR)