Hampton Roads Bankshares Announces Third Quarter 2015 Financial Results

• Net income totaled $0.3 million in the third quarter of 2015 despite $2.2 million in one-time expenses attributable to CEO transition
  
• Mortgage loan originations increased 67% on a year-to-date basis
  
• Average core deposits were up 6% on a year-to-date basis
  
• Merger of the bank subsidiaries was completed in October
  

NORFOLK, Va., Nov. 05, 2015 (GLOBE NEWSWIRE) -- Hampton Roads Bankshares, Inc. (the “Company”) (Nasdaq: HMPR), the holding company for the Bank of Hampton Roads (“BOHR”), today announced financial results for the third quarter of 2015.  Net income attributable to common shareholders for the three and nine months ended September 30, 2015 was $0.3 million and $4.4 million, respectively, as compared with net income for the three and nine months ended September 30, 2014 of $2.0 million and $8.3 million, respectively.  Included in these results was $2.9 million of income attributable to a one-time insurance benefit received in the first quarter of 2014 and one-time CEO transition expenses totaling $2.2 million in the third quarter of 2015.  Excluding the CEO transition expenses, earnings for the third quarter of 2015 would have totaled $2.5 million, an increase of 25% over the third quarter of 2014.

Merger of Subsidiary Banks

On October 13, 2015, the Company merged its two bank subsidiaries, BOHR and Shore Bank ("Shore") into BOHR.  The merged bank subsidiary will operate under the brand names of Bank of Hampton Roads, Gateway Bank, and Shore Bank in their respective markets.  The Company's mortgage banking subsidiary, Gateway Bank Mortgage, and its specialty finance business, Shore Premier Finance, will continue to operate under their respective brand names in all the markets they serve.

Net Interest Income

Net interest income was $15.6 million and $46.0 million, respectively, in the third quarter and first nine months of 2015.  This represented an increase of $0.4 million and $0.9 million, respectively, over the comparable periods in 2014.  Growth in loans drove the increases.  Loans totaled $1.5 billion at September 30, 2015, compared to $1.4 billion at the end of 2014.

Credit Quality

The non-performing assets ratio, defined as the ratio of non-performing assets to gross loans plus loans held for sale plus other real estate owned and repossessed assets, was 2.94% and 2.95% at September 30, 2015 and December 31, 2014, respectively.  At September 30, 2015 and December 31, 2014, there were no loans categorized as 90 days or more past due and still accruing interest.

The allowance for loan losses was $22.9 million at September 30, 2015, or 1.49% of loans.  This compares to $27.1 million, or 1.90% of loans at year-end 2014.  Net credit losses totaled $4.9 million and $4.8 million, respectively, in the third quarter and first nine months of 2015.  No provision for loan losses was recorded in the third quarter of 2015.  Provision for loan losses was $0.6 million during the nine months ended September 30, 2015.

Noninterest Income

Noninterest income for the three and nine months ended September 30, 2015 was $8.4 million and $22.9 million, respectively, an increase of $2.3 million or 37% and $3.9 million or 21%, compared to the same periods in 2014.  Mortgage banking revenue has benefited from the favorable mortgage origination environment in 2015.  Mortgage originations for the nine months ended September 30, 2015 totaled $552.5 million compared to $330.3 million in the same period in 2014. Offsetting growth in mortgage was a year-over-year decline in income from bank-owned life insurance related to death benefits received in 2014.

Noninterest Expense

Noninterest expense for the three and nine months ended September 30, 2015 was $23.2 million and $62.3 million, respectively, an increase of $4.0 million or 21% and $6.9 million or 12%, compared to the same periods in 2014.  The overall increase in noninterest expense was primarily driven by increases in salaries and employee benefits resulting from business growth, mortgage-related commissions, one-time CEO transition costs, and increased share-based compensation.

Balance Sheet Trends

Assets were $2.0 billion at September 30, 2015, generally in line with year-end 2014.  Since December 31, 2014, there has been a significant shift out of relatively low-yielding assets into loans.

Loans have grown 8% since December 31, 2014 to $1.5 billion. This growth was primarily driven by a $104.7 million marine loan portfolio purchase which occurred in the first quarter of 2015.

Total deposits were $1.7 billion at September 30, 2015, an increase of $105.5 million or 7% from December 31, 2014.  The Company has made a concerted effort to attract additional deposits in order to support loan growth.

Year-to-date average core deposits, which exclude brokered deposits and certificates of deposit greater than $100,000, were $1.3 billion in 2015.  This represented an increase of 6% over 2014.

Capitalization

As of September 30, 2015, consolidated regulatory capital ratios were Common Equity Tier 1 Capital Ratio of 11.58%, Tier 1 Risk-Based Capital Ratio of 13.19%, Total Risk-Based Capital Ratio of 14.44%, and Tier 1 Leverage Ratio of 11.56%.  As of September 30, 2015, the Company exceeded the regulatory capital minimums, and BOHR and Shore were considered “well capitalized” under the risk-based capital standards.

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, 2014 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 subsidiary is BOHR.  BOHR engages in general community and commercial banking business, targeting the needs of individuals and small- to medium-sized businesses in our primary service areas.  Currently, BOHR operates 17 full-service offices in the Hampton Roads region of southeastern Virginia, 10 full-service offices throughout Richmond, Virginia and the Northeastern and Research Triangle regions of North Carolina that do business as Gateway Bank and 7 full-service offices on the Eastern Shore of Virginia and in Maryland and 3 loan production offices in Maryland and Delaware that do business as Shore Bank. Through various divisions, BOHR also offers mortgage banking and marine financing.  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.