November 19, 2009 (FinancialWire) — Hampton Roads Bankshares, Inc. (NASDAQ: HMPR), the holding company for Bank of Hampton Roads and Shore Bank, has notified the United States Department of the Treasury (the “Treasury) of its intent to defer the payment of its regular quarterly cash dividends on its Fixed Rate Cumulative Perpetual preferred stock, Series C (the “TARP preferred stock), issued to the Treasury in connection with the company’s participation in the Treasury’s TARP Capital Purchase Program.

Under the terms of the TARP preferred stock, the company is required to pay on a quarterly basis a dividend rate of 5% per year for the first five years, after which the dividend rate automatically increases to 9% per year. Dividend payments may be deferred, but the dividend is a cumulative dividend and failure to pay dividends for six dividend periods would trigger board appointment rights for the holder of the TARP preferred stock.

The company previously suspended quarterly dividend payments to series A and series B preferred shareholders, and is required to defer dividends on the TARP preferred stock under applicable law. However, because the TARP preferred stock dividend is cumulative, the dividend has been accrued for payment in the future. These actions are part of the company’s multi-faceted strategy to fortify its balance sheet, preserve capital, and recognize additional cost savings. In order to improve the company’s capital position, the company is seeking approval from its shareholders to allow the holders of series A and B preferred stock the right to exchange their preferred stock for common stock and, further, is considering the sale of debt, stock, warrants, and certain assets.

John A.B. “Andy” Davies, Jr., company president and chief executive officer, commented, “The deferral of the TARP preferred stock dividend is something that we are legally required to do based in part on the suspension of dividends for our series A and B preferred stock. We continue to believe that the steps we are taking to positively manage capital are essential in this financial environment and will provide long-term benefits to our shareholders. We are prepared to pay the TARP dividend as soon as we are legally allowed to do so.”

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