8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)    November 7, 2013

Hampton Roads Bankshares, Inc.
(Exact name of registrant as specified in its charter)
Virginia	001-32968	54-2053718
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)
641 Lynnhaven Parkway, Virginia Beach, VA 23452
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code (757) 217-1000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

Hampton Roads Bankshares, Inc. (the “Company”), the holding company for The Bank of Hampton Roads and Shore Bank, issued a press release today regarding financial results for the third quarter of 2013, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Use of Non-GAAP Financial Measures.

Certain measures provided in the press release attached as Exhibit 99.1 may be deemed to be non-GAAP financial measures.  Tangible common equity to tangible assets ratio is not a measure recognized under U.S. generally accepted accounting principles (“GAAP”) and, therefore, is considered a non-GAAP financial measure.  The most comparable GAAP measure is the ratio of total common shareholders’ equity to total assets.

Management uses this non-GAAP financial measure to assess the strength of the Company’s capital position.  The Company believes that this non-GAAP financial measure provides meaningful additional information about the Company to assist investors in evaluating the Company’s financial strength and capitalization.  The tangible common equity to tangible assets ratio is used by management and investment analysts to assess the strength of the Company’s capital position absent the effects of intangible assets.  Management, banking regulators and many stock analysts use the tangible common equity ratio in conjunction with more traditional bank capital ratios to compare the capital adequacy of banking organizations with significant amounts of intangible assets.

Below is a reconciliation of this non-GAAP financial measure to the most directly comparable financial measure calculated and presented in accordance with GAAP.

Non-GAAP Measurement

(From Press Release)

September 30, 2013

(dollars in thousands)	As of September 30, 2013			As of June 30, 2013			As of September 30, 2012
Total assets	$	1,985,420		$	2,008,938		$	2,071,433
Less:  intangible assets		1,585			1,741			2,745
Tangible assets	$	1,983,835		$	2,007,197		$	2,068,688
Total shareholders’ equity*	$	184,485		$	181,257		$	189,306
Less:  intangible assets		1,585			1,741			2,745
Common shareholders’ equity – tangible*	$	182,900		$	179,516		$	186,561
Tangible common equity to tangible assets*		9.22	%		8.94	%		9.02	%
Total common shareholders’ equity to total assets*		9.29	%		9.02	%		9.14	%

*Equity amounts exclude non-controlling interest

Item 7.01. Regulation FD Disclosure.

As noted in Item 2.02, the Company issued a press release regarding its financial results, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

The information contained in Item 2.02 above and this Item 7.01, including that which is incorporated by reference, is being furnished to the Securities and Exchange Commission (the “SEC”).  Such information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section.  The information shall not be deemed incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, except as expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

Ex. 99.1 Press Release, dated November 7, 2013, announcing Hampton Roads Bankshares, Inc.’s third quarter financial results.

Caution About Forward-Looking Statements.

Certain statements made herein and in the attached earnings press release 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, including statements about future trends and strategies.  Although the Company believes that its expectations with respect to such 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 those expressed or implied by such forward-looking statements.  Factors that could cause actual events or results to differ significantly from those described in the forward-looking statements include, but are not limited to those described in the cautionary language included under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, and other filings made with the SEC.

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 hereunto duly authorized.

	Hampton Roads Bankshares, Inc.
Date:    November 7, 2013	By:	/s/ Douglas J. Glenn
		Douglas J. Glenn
		President and Chief Executive Officer

EXHIBIT INDEX

Exhibit No.	Description
Ex. 99.1	Press Release, dated November 7, 2013, announcing Hampton Roads Bankshares, Inc.’s third quarter financial results.

EX-99.1

Exhibit 99.1

     November 7, 2013

Contact:	Douglas J. Glenn
	President and Chief Executive Officer
	(757) 217-1000

Hampton Roads Bankshares Announces Third Quarter Financial Results

· Third quarter net income available to common shareholders totaled $2.8 million

· Year-to-date earnings totaled $3.5 million, a $23.0 million increase over the comparable period in 2012

· Average core deposits grew $21.2 million during the third quarter

· Non-performing assets declined to 4.39% of total assets

from 7.68% over past 12 months

Hampton Roads Bankshares, Inc. (the “Company”) (Nasdaq: HMPR), the holding company for the Bank of Hampton Roads and Shore Bank, today announced financial results for the third quarter of 2013.  Net income available to common shareholders was $2.8 million for the three months ended September 30, 2013, compared to $0.1 million for the second quarter of 2013 and a net loss available to common shareholders of $5.9 million for the third quarter of 2012.  On a year-to-date basis, net income available to common shareholders totaled $3.5 million in 2013, compared to a net loss available to common shareholders of $19.5 million for the comparable period in 2012.

 “I am pleased with the Company’s performance in the third quarter,” said Douglas Glenn, President and Chief Executive Officer.   "We are focused on ensuring that our business model meets the needs of our customers in an evolving banking environment and on continuing to position our Company for future growth through the implementation of our One Bank Strategy.  This quarter represents yet another building block in our long-term foundation."

Net Interest Income

Net interest income for the three and nine months ended September 30, 2013 was $15.8 million and $47.8 million, respectively, a decrease of $37 thousand and $910 thousand, respectively, for the same periods ended September 30, 2012.  The decrease in net interest income for the nine months ended September 30, 2013 was due to decreases in average interest-earning assets and the yields received on these assets, partially offset by an increase in net interest margin which benefited from a lower cost of funding due to re-pricing of deposits and a change in the composition of interest bearing liabilities.  Net interest margin, as calculated using our new method that now includes the impact of nonaccrual loans, increased to 3.42% and 3.44% for the three and nine months ended September 30, 2013, respectively from 3.35% and 3.38% for the three and nine months ended September 30, 2012.

Credit Quality

The Company’s ratio of non-performing assets to total assets decreased to 4.39% at September 30, 2013 from 4.81% at June 30, 2013. On a year over year basis, the ratio of non-performing assets to total assets declined by 43%. Total past due loans which continue to accrue interest decreased to $4.8 million, or 0.35% of total loans outstanding, at September 30, 2013 from $6.2 million, or 0.44% of total loans outstanding, at June 30, 2013.

As a result of the Company’s quarterly analysis of the adequacy of the allowance for loan losses, the Company did not record a provision for loan losses in the third quarter of 2013, compared to a provision of $2.5 million for the comparable period in 2012 and $1.0 million for the second quarter of 2013. Provision for loan losses totaled $1.0 million for the nine months ended September 30, 2013 compared to $14.1 million for the comparable period in 2012. During the third quarter of 2013, the Company recovered $1.9 million from loans that had previously been charged-off, which increased the allowance for loan losses at September 30, 2013.

Noninterest Income

Noninterest income for the three and nine months ended September 30, 2013 was $7.9 million and $20.9 million, respectively, a 259% and 186% increase over the comparative periods in 2012.  This was largely due to a decline in losses on other real estate owned and repossessed assets.  Mortgage revenue decreased during the third quarter of 2013 compared to the same period in 2012 due to declines in both origination volume and margin.  For the nine months ended September 30, 2013 mortgage revenue remained comparable to the corresponding period in 2012. 

Income from bank-owned life insurance increased $1.8 million to $2.2 million and $3.0 million for the three and nine month periods ended September 30, 2013, respectively, compared to $399 thousand and $1.3 million for the comparative periods in 2012, largely due to a $1.8 million life insurance benefit recognized during the third quarter of 2013.

Noninterest Expense

Noninterest expense was $20.8 million and $62.4 million for the three and nine months ended September 30, 2013, respectively, which was an increase of $396 thousand and $3.3 million over the comparable periods in 2012. The 2013 year to date increase is primarily due to higher expenses related to salary and employee benefits and occupancy, partially offset by a decrease in problem loan and repossessed asset costs.

Occupancy expense increased $844 thousand and $1.6 million for the three and nine months ended September 30, 2013, respectively, compared to the same periods in 2012 due to accelerated amortization of leasehold improvements at a closed branch and the accrual needed as a result of our decision to cease using a portion of the leased space in Dominion Tower after moving the Company’s headquarters to Virginia Beach, Virginia.

Balance Sheet Trends

Total assets were $2.0 billion at September 30, 2013.  Total assets decreased by $68.7 million or 3% from $2.1 billion at December 31, 2012.  The decrease in assets was primarily associated with a $54.4 million or 65% decrease in loans held for sale, which can vary each month based on the timing of loan closings and subsequent loan sales to third party investors.

Gross loans decreased by $61.5 million or 4% during the nine months ended September 30, 2013, primarily through reductions in non-performing loans (both payoffs and charge-offs).  The majority of the recent loan demand within our markets has come from the real estate - commercial mortgage category.  Due to relatively soft loan demand in several loan categories, the majority of cash received from normal principal amortization and loan payoffs was reinvested in overnight funds sold and due from the Federal Reserve Bank, which increased $25.6 million or 31% from December 31, 2012, and in investment securities available for sale, which increased $19.1 million or 7% from December 31, 2012.

Deposits decreased $58.4 million or 4% from December 31, 2012 as a result of decreases of $56.8 million in time deposits under $100 thousand and $72.2 million in time deposits over $100 thousand, partially offset by increases of $14.5 million in noninterest-bearing demand deposits, $49.8 million in interest-bearing demand deposits, and $6.4 million in interest-bearing savings deposits.  Decline in time deposits is a result of the Company’s efforts to improve both the average cost and mix of funds.  Average core deposits, which exclude brokered deposits and certificates of deposit greater than $100,000, increased by $21.2 million during the third quarter of 2013 to $1.2 billion as a result of successful marketing campaigns.

Capitalization

At September 30, 2013, the Company exceeded all of the regulatory capital minimums and Bank of Hampton Roads and Shore Bank were both considered “well capitalized” under all applicable regulatory capital standards.  The Company’s total risk-based capital, Tier 1 and Tier 1 leverage ratios as of September 30, 2013, were 14.80%, 13.54% and 10.56%, respectively.

Caution About Forward-Looking Statements

Certain statements made in this press release 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, including statements about future trends and strategies.  Although the Company believes that its expectations with respect to such 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 those expressed or implied by such forward-looking statements.  Factors that could cause actual events or results to differ significantly from those described in the forward-looking statements include, but are not limited to those described in the cautionary language included under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2012, Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, and other filings made with the SEC.

About Hampton Roads Bankshares

Hampton Roads Bankshares, Inc. is a bank holding company headquartered in Virginia Beach, Virginia.  The Company’s primary subsidiaries are The Bank of Hampton Roads, which opened for business in 1987, and Shore Bank, which opened in 1961 (collectively, the “Banks”).  The Banks engage in general community and commercial banking business, targeting the needs of individuals and small to medium-sized businesses.  Currently, The Bank of Hampton Roads operates banking offices in Virginia and North Carolina doing business as Bank of Hampton Roads and Gateway Bank & Trust Co.  Shore Bank serves the Eastern Shore of Virginia, eastern Maryland and southern Delaware through seven banking offices, ATMs and loan production offices in West Ocean City, Maryland and Rehoboth Beach, Delaware. Through various affiliates, the Banks also offer mortgage banking services and investment products.  Shares of the Company’s common stock are traded on the NASDAQ Global Select Market under the symbol “HMPR.”  Additional information about the Company and its subsidiaries can be found at www.hamptonroadsbanksharesinc.com.

Hampton Roads Bankshares, Inc.
Financial Highlights
(in thousands)
(unaudited)	September 30, 2013			June 30, 2013			September 30, 2012
Assets:
Cash and due from banks	$	16,251		$	16,783		$	15,316
Interest-bearing deposits in other banks		662			648			694
Overnight funds sold and due from Federal Reserve Bank		109,396			107,339			119,242
Investment securities available for sale, at fair value		295,626			278,386			293,335
Restricted equity securities, at cost		17,234			17,351			17,769
Loans held for sale		29,633			51,369			60,360
Loans		1,370,728			1,400,250			1,416,933
Allowance for loan losses		(37,701	)		(38,234	)		(54,444	)
Net loans		1,333,027			1,362,016			1,362,489
Premises and equipment, net		69,634			69,925			78,975
Interest receivable		4,862			5,003			5,589
Other real estate owned and repossessed assets,
net of valuation allowance		39,196			32,906			44,061
Intangible assets, net		1,585			1,741			2,745
Bank-owned life insurance		56,216			54,006			52,840
Other assets		12,098			11,465			18,018
Totals assets	$	1,985,420		$	2,008,938		$	2,071,433
Liabilities and Shareholders' Equity:
Deposits:
Noninterest-bearing demand	$	277,731		$	268,372		$	252,093
Interest-bearing:
Demand		569,608			575,615			527,214
Savings		66,297			66,751			60,610
Time deposits:
Less than $100		336,753			341,193			402,457
$100 or more		309,010			324,466			388,569
Total deposits		1,559,399			1,576,397			1,630,943
Federal Home Loan Bank borrowings		194,399			194,619			195,280
Other borrowings		28,882			38,760			38,457
Interest payable		5,670			5,493			4,590
Other liabilities		12,075			11,988			11,757
Total liabilities		1,800,425			1,827,257			1,881,027
Shareholders' equity:
Common stock		1,703			1,703			1,703
Capital surplus		587,088			586,745			582,644
Retained deficit		(405,415	)		(408,219	)		(403,342	)
Accumulated other comprehensive income, net of tax		1,109			1,028			8,301
Total shareholders' equity before non-controlling interest		184,485			181,257			189,306
Non-controlling interest		510			424			1,100
Total shareholders' equity		184,995			181,681			190,406
Total liabilities and shareholders' equity	$	1,985,420		$	2,008,938		$	2,071,433
Non-performing Assets at Period-End:
Nonaccrual loans including nonaccrual impaired loans	$	47,604		$	63,739		$	115,093
Loans 90 days past due and still accruing interest		320			-			-
Other real estate owned and repossessed assets		39,196			32,906			44,061
Total non-performing assets	$	87,120		$	96,645		$	159,154
Composition of Loan Portfolio at Period-End:
Commercial	$	218,504		$	239,293		$	247,125
Construction		171,683			183,513			233,194
Real-estate commercial		569,325			560,235			532,884
Real-estate residential		356,998			355,568			379,558
Installment		55,759			62,680			24,302
Deferred loan fees and related costs		(1,541	)		(1,039	)		(130	)
Total loans	$	1,370,728		$	1,400,250		$	1,416,933

Hampton Roads Bankshares, Inc.
Financial Highlights
(in thousands, except share and per share data)	Three Months Ended									Nine Months Ended
(unaudited)	September 30, 2013			June 30, 2013			September 30, 2012			September 30, 2013			September 30, 2012
Interest Income:
Loans, including fees	$	17,122		$	17,687		$	17,904		$	52,482		$	56,026
Investment securities		1,831			1,839			1,986			5,485			5,992
Overnight funds sold and due from FRB		70			63			43			175			189
Interest-bearing deposits in other banks		1			-			-			1			1
Total interest income		19,024			19,589			19,933			58,143			62,208
Interest Expense:
Deposits:
Demand		523			558			549			1,590			1,499
Savings		9			9			19			28			61
Time deposits:
Less than $100		851			921			1,168			2,772			4,145
$100 or more		837			935			1,187			2,780			4,210
Interest on deposits		2,220			2,423			2,923			7,170			9,915
Federal Home Loan Bank borrowings		477			479			562			1,442			1,728
Other borrowings		527			592			611			1,706			1,830
Total interest expense		3,224			3,494			4,096			10,318			13,473
Net interest income		15,800			16,095			15,837			47,825			48,735
Provision for loan losses		-			1,000			2,476			1,000			14,124
Net interest income after provision for loan losses		15,800			15,095			13,361			46,825			34,611
Noninterest Income:
Mortgage banking revenue		3,139			4,250			5,186			13,353			12,299
Service charges on deposit accounts		1,264			1,300			1,276			3,781			3,883
Income from bank-owned life insurance		2,210			434			399			3,017			1,261
Gain (loss) on sale of premises and equipment		243			7			-			123			(47	)
Impairment of premises and equipment		-			-			-			(2,825	)		-
Losses on other real estate owned and repossessed assets		(378	)		(774	)		(6,445	)		(2,056	)		(14,357	)
Gain on sale of investment securities available for sale		-			763			218			763			479
Visa check card income		649			662			624			1,907			1,782
Other		775			942			942			2,851			2,001
Total noninterest income		7,902			7,584			2,200			20,914			7,301
Noninterest Expense:
Salaries and employee benefits		9,946			10,951			10,117			31,853			28,973
Occupancy		2,772			2,517			1,928			7,091			5,483
FDIC insurance		927			878			1,129			2,823			3,530
Professional and consultant fees		1,693			1,639			1,514			4,225			4,852
Data processing		1,097			1,129			970			3,023			2,986
Problem loan and repossessed asset costs		723			530			1,245			1,733			2,761
Equipment		386			491			667			1,341			2,101
Other		3,246			4,058			2,824			10,326			8,386
Total noninterest expense		20,790			22,193			20,394			62,415			59,072
Income (loss) before provision for income taxes		2,912			486			(4,833	)		5,324			(17,160	)
Provision for income taxes		22			135			-			157			-
Net income (loss)		2,890			351			(4,833	)		5,167			(17,160	)
Net income attributable to non-controlling interest		86			262			1,088			1,642			2,333
Net income (loss) attributable to Hampton Roads Bankshares, Inc.	$	2,804		$	89		$	(5,921	)	$	3,525		$	(19,493	)
Per Share:
Cash dividends declared	$	-		$	-		$	-		$	-		$	-
Basic Income (loss)	$	0.02		$	-		$	(0.05	)	$	0.02		$	(0.32	)
Diluted Income (loss)	$	0.02		$	-		$	(0.05	)	$	0.02		$	(0.32	)
Basic weighted average shares outstanding		170,388,263			170,391,127			108,785,717			170,389,513			60,349,261
Effect of dilutive shares and warrant		2,067,958			1,247,524			-			2,025,830			-
Diluted weighted average shares outstanding		172,456,221			171,638,651			108,785,717			172,415,343			60,349,261
Daily Averages:
Total assets	$	1,995,473		$	2,027,560		$	2,054,380		$	2,017,966		$	2,100,016
Gross loans (excludes loans held for sale)		1,375,985			1,415,524			1,416,959			1,406,063			1,450,475
Investments		299,411			298,100			322,306			300,470			318,853
Intangible assets		1,659			1,903			2,907			1,930			3,234
Total deposits		1,569,781			1,590,107			1,651,972			1,584,826			1,722,432
Total borrowings		226,666			233,437			233,792			231,195			233,925
Shareholders' equity *		180,994			187,406			150,882			185,030			124,715
Shareholders' equity - tangible *		179,335			185,503			147,975			183,100			121,481
Interest-earning assets		1,835,211			1,874,902			1,878,073			1,861,476			1,928,799
Interest-bearing liabilities		1,525,821			1,574,222			1,636,874			1,563,151			1,722,166
Financial Ratios:
Return on average assets		0.56	%		0.02	%		-1.15	%		0.23	%		-1.24	%
Return on average equity *		6.15	%		0.19	%		-15.61	%		2.55	%		-20.88	%
Return on average equity - tangible *		6.20	%		0.19	%		-15.92	%		2.57	%		-21.43	%
Net interest margin		3.42	%		3.44	%		3.35	%		3.44	%		3.38	%
Efficiency ratio		87.71	%		96.84	%		114.45	%		88.16	%		106.33	%
Tangible equity to tangible assets *		9.22	%		8.94	%		9.02	%		9.22	%		9.02	%
Allowance for Loan Losses:
Beginning balance	$	38,234		$	43,709		$	62,907		$	48,382		$	74,947
Provision		-			1,000			2,476			1,000			14,124
Charge-offs		(2,443	)		(8,501	)		(13,281	)		(16,966	)		(40,933	)
Recoveries		1,910			2,026			2,342			5,285			6,306
Ending balance	$	37,701		$	38,234		$	54,444		$	37,701		$	54,444
Asset Quality Ratios:
Annualized net chargeoffs to average loans		-0.15	%		-1.83	%		-3.06	%		-1.11	%		-3.19	%
Nonperforming loans to total loans		3.50	%		4.55	%		8.12	%		3.50	%		8.12	%
Nonperforming assets to total assets		4.39	%		4.81	%		7.68	%		4.39	%		7.68	%
Allowance for loan losses to total loans		2.75	%		2.73	%		3.84	%		2.75	%		3.84	%
* Equity amounts exclude non-controlling interest

Use of Non-GAAP Financial Measures

This earnings press release contains GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding our results of operations or financial position.  Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in the Form 8-K filed related to this release.  The Form 8-K can be found on the SEC’s EDGAR website at www.sec.gov or our website at www.hamptonroadsbanksharesinc.com.

Non-GAAP Measurement September 30, 2013	As of September 30, 2013			As of June 30, 2013			As of September 30, 2012
Total assets	$	1,985,420		$	2,008,938		$	2,071,433
Less: intangible assets		1,585			1,741			2,745
Tangible assets	$	1,983,835		$	2,007,197		$	2,068,688
Total shareholders’ equity *	$	184,485		$	181,257		$	189,306
Less: intangible assets		1,585			1,741			2,745
Common shareholders’ equity - tangible *	$	182,900		$	179,516		$	186,561
Tangible common equity to tangible assets *		9.22	%		8.94	%		9.02	%
Total common shareholders’ equity to total assets *		9.29	%		9.02	%		9.14	%
* Equity amounts exclude non-controlling interest