Filed by Hampton Roads Bankshares, Inc.
pursuant to Rule 425 under the Securities Act of 1933,
as amended, and deemed filed pursuant to Rule 14a-12 under the
Securities Exchange
Act of 1934, as amended.
Subject Company: Shore Financial Corporation
Commission File No.: 000-23847
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PRESS RELEASE
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Contact:
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Tiffany K. Glenn
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For Immediate Release
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Senior Vice President
and Marketing Officer
(757) 217-1000
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20
TH
YEAR OF RECORD EARNINGS
REPORTED BY HAMPTON ROADS BANKSHARES
NORFOLK, VIRGINIA, JANUARY 23, 2008:
Hampton Roads Bankshares, Inc. (NASDAQ: HMPR) (the Company or Hampton Roads Bankshares), the
financial holding company for Bank of Hampton Roads, announced today that net income for 2007 jumped 12.8% from 2006 to $6,810,613. For the twelve month period ended December 31, 2007, diluted earnings per share were unchanged from 2006 at
$0.65. For the fourth quarter of 2007, the Company earned $1,713,107, or $0.16 per diluted share, compared to $1,621,973, or $0.16 per diluted share in the same period in 2006.
With regard to diluted earnings per share remaining steady with 2006, Company President and Chief Executive Officer Jack W. Gibson commented, A simple year-over-year comparison of our earnings per share results
does not fully illustrate the accomplishments of our company in 2007. In the third quarter of 2006 we raised approximately $19 million in new capital through both a rights offering to our shareholders and a public offering, both of which were fully
subscribed, resulting in the issuance of 1,849,200 new shares of our common stock. We raised this capital to support the companys growth and expansion. In doing so, we projected that it would take up to eighteen months for our earnings per
share to overcome the effect of the offerings. I am exceptionally pleased that we were able to reach our objective far earlier than anticipated.
The Companys earnings results for 2007 produced a return on average assets of 1.31% and a return on average
shareholders equity of 9.52%. This is the fifteenth (15
th
) consecutive year that the Company posted a return on average assets of 1.20% or
better. For the fourth quarter of 2007, return on average assets was 1.24% and return on average shareholders equity was 9.33%.
Total assets
as of December 31, 2007, rose 18.4% to $564 million, up from $476 million a year ago. In 2007, the Company enjoyed a 27.2% increase in total loans, ending the year at a record-breaking $477 million, $102 million more than at December 31,
2006. Total deposits were up 18.8% to $431 million on December 31, 2007, from $363 million on December 31, 2006.
Growth in the Companys
loan portfolio, combined with a tighter net interest margin, yielded net interest income of $24,187,402 for 2007, an increase of 15.7% over 2006. The Companys net interest margin was 4.95% for the year and 4.68% for the fourth quarter of 2007.
For the same
periods in 2006, the Companys net interest margin was 5.20% and 5.03%, respectively. Our strong loan growth
and diverse deposit base tempered the impact of recent interest rate cuts on our net interest margin, stated Gibson. At year-end, approximately $101 million or 23% of our total deposits were in the form of non-interest bearing demand
deposit accounts.
President Gibson observed that he remains pleased with the Companys asset quality with non-performing assets
totaling only 0.47% of total assets, or $2,644,604 at December 31, 2007. Hampton Roads Bankshares added $1,232,000 to the loan loss reserve in 2007 in response to its robust loan growth and the current nature of the economy, as compared to
$180,000 in 2006. Gibson added, It is also important to note that our company has no sub-prime or alt-a loans, which are the type of loans that are currently capturing the attention of both the markets and consumers alike.
President Gibson concluded, 2007 was an outstanding year for our company. In the first quarter, our total
assets surpassed the $500 million mark, a banking milestone. In the second and third quarters, Hampton Roads Bankshares increased its visibility to the investment community by joining the Russell Microcap Index and qualifying for inclusion in the
NASDAQ Global Select Market, NASDAQs highest market tier. In the fourth quarter, we celebrated our 20
th
anniversary along with our 20
th
consecutive year of record earnings. I am extremely proud of our accomplishments and of our talented team of people who worked so hard to achieve them. 2008
should prove an interesting year in the financial services industry with narrowing margins and a slowing real estate market. However, I remain optimistic that our company is well-positioned to continue to provide value to our shareholders, customers
and employees.
2
HAMPTON ROADS BANKSHARES, INC.
FINANCIAL HIGHLIGHTS
UNAUDITED
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Three Months Ended
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Twelve Months Ended
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Operating Results
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Dec. 31, 2007
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Dec. 31, 2006
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Dec. 31, 2007
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Dec. 31, 2006
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Interest income
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$
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9,999,398
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$
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8,448,531
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$
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38,203,095
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$
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30,021,271
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Interest expense
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3,891,284
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2,896,191
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14,015,693
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9,123,285
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Net interest income
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6,108,114
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5,552,340
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24,187,402
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20,897,986
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Provision for loan losses
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494,000
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90,000
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1,232,000
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180,000
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Noninterest income
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862,584
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830,016
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3,440,221
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3,397,879
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Noninterest expense
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3,824,553
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3,830,364
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15,994,443
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14,945,741
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Income taxes
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939,038
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840,019
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3,590,567
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3,134,585
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Net income
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$
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1,713,107
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$
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1,621,973
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$
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6,810,613
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$
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6,035,539
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Earnings per share:
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Basic
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$
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0.17
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$
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0.16
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$
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0.67
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$
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0.66
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Diluted
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0.16
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0.16
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0.65
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0.65
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Book value per share
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7.14
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6.84
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7.14
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6.84
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Balance Sheet at Period-End
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Total loans
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$
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477,149,232
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$
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375,044,161
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$
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477,149,232
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$
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375,044,161
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Total securities
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47,081,325
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59,544,690
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47,081,325
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59,544,690
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Total deposits
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431,456,747
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363,261,329
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431,456,747
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363,261,329
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Other borrowings
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53,000,000
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38,000,000
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53,000,000
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38,000,000
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Shareholders equity
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73,660,014
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70,162,543
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73,660,014
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70,162,543
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Total assets
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563,828,128
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476,299,468
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563,828,128
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476,299,468
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Daily Averages
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Total loans
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$
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467,380,928
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$
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360,965,976
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$
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428,873,516
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$
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325,505,725
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Total securities
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48,905,899
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60,549,314
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53,945,981
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67,129,591
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Total deposits
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408,028,864
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354,986,638
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389,054,627
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333,242,327
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Other borrowings
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58,611,957
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38,000,000
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51,336,110
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36,967,808
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Shareholders equity
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72,848,283
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69,228,309
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71,545,104
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57,640,340
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Interest-earning assets
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517,557,306
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438,199,849
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488,381,069
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401,953,739
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Interest-bearing liabilities
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366,065,314
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294,904,030
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341,079,167
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270,333,404
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Total assets
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547,702,677
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468,408,609
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519,174,846
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432,715,790
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Financial Ratios
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Return on average assets
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1.24
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%
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1.37
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%
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1.31
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%
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1.39
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%
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Return on average equity
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9.33
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%
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9.30
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%
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9.52
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%
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10.47
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%
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Net interest margin
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4.68
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%
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5.03
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%
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4.95
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%
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5.20
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%
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Efficiency ratio
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54.87
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%
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60.01
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%
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57.89
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%
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61.52
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%
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3
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Three Months Ended
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Twelve Months Ended
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Allowance for Loan Losses
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Dec. 31, 2007
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Dec. 31, 2006
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Dec. 31, 2007
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Dec. 31, 2006
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Beginning balance
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$
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4,647,266
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$
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3,821,464
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$
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3,910,943
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$
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3,597,497
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Provision for losses
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494,000
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90,000
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1,232,000
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180,000
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Charge-offs
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(98,973
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(4,382
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(109,748
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(59,118
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Recoveries
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290
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3,861
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9,388
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192,564
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Ending balance
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5,042,583
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3,910,943
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5,042,583
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3,910,943
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Nonperforming Assets
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Nonaccrual loans
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$
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1,792,758
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$
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1,629,990
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$
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1,792,758
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$
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1,629,990
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Loans 90 days past due and still accruing interest
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851,846
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851,846
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Other real estate owned
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Total nonperforming assets
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2,644,604
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1,629,990
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2,644,604
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1,629,990
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Asset Quality Ratios
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Nonperforming assets to total assets
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0.47
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%
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0.34
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%
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0.47
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%
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0.34
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%
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Allowance for loan losses to total loans
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1.06
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%
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1.04
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%
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1.06
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%
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1.04
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%
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Allowance for loan losses to nonperforming assets
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190.67
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%
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239.94
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%
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190.67
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%
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239.94
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%
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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 Companys 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 Global Select Market under the symbol HMPR. Additional information about the Company and its subsidiaries can
be found on the Web at www.bankofhamptonroads.com.
Additional Information Concerning Pending Merger with Shore Financial Corporation.
On January 9, 2008 Hampton Roads Bankshares and Shore Financial Corporation (Shore Financial) announced a definitive agreement,
under which Shore Financial will be merged with and into Hampton Roads Bankshares. Hampton Roads Bankshares will file with the Securities and Exchange Commission (the SEC) a registration statement on Form S-4 to register the shares of
its common stock to be issued to the shareholders of Shore Financial in connection with the proposed transaction. The registration statement will include a joint proxy statement/prospectus that will be sent to the shareholders of Hampton Roads
Bankshares and Shore Financial seeking their approval of the proposed merger. The joint proxy statement/prospectus will contain important information about Hampton Roads Bankshares, Shore Financial, and the merger and about the persons soliciting
proxies from shareholders of Hampton Roads Bankshares and Shore Financial in the merger, including the executive officers and directors of each of Hampton Roads Bankshares and Shore Financial, and their respective interests in the merger, such as
their stock ownership in Hampton Roads Bankshares and Shore Financial.
4
Additional information about Hampton Roads Bankshares directors and executive officers is included in Hampton Roads
Bankshares Annual Report on Form 10-K for the year ended December 31, 2006, which was filed with the SEC and is available on Hampton Roads Bankshares website at
www.bankofhamptonroads.com
and at the Hampton Roads Bankshares
address provided below. Additional information about Shore Financials directors and executive officers is included in Shore Financials Annual Report on Form 10-K for the year ended December 31, 2006, which was filed with the SEC and
is available on Shore Financials website at
www.shorebank.com
and at the Shore Financial address provided below.
Investors and shareholders
of Hampton Roads Bank and Shore Financial are urged to read the registration statement on Form S-4 and the joint proxy statement/prospectus included in the registration statement on Form S-4, and any other relevant documents to be filed with the SEC
in connection with the proposed transaction, because they will contain important information about Hampton Roads Bankshares, Shore Financial, and the proposed transaction.
Investors and shareholders may obtain free copies of the joint proxy statement/prospectus and other documents related to the merger, once they are filed with the SEC, through the SECs website at
www.sec.gov
. Free copies of the joint proxy statement/prospectus and other relevant documents also may be obtained by directing a request by telephone or mail to the following:
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Hampton Roads Bankshares, Inc.
999 Waterside Drive, Suite 200
Norfolk, VA 23510
Attention: Jack W. Gibson
Telephone Number: (757) 217-1000
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Shore Financial Corporation
25020 Shore Parkway
Onley, Virginia 23418
Attention: Scott C. Harvard
Telephone Number: (757) 787-1335
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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 Companys Annual Report on Form 10-K for the year ended
December 31, 2006, and other reports filed and furnished to the Securities and Exchange Commission. The Company undertakes no obligation to update any forward-looking statements made in this press release and this release shall not constitute
an offer to sell or the solicitation of an offer to buy securities in any jurisdiction in which such solicitation would be unlawful.
###
5
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