UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(RULE 14a-101)

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

Filed by the Registrant  x                            Filed by a Party other than the Registrant  ¨

Check the appropriate box:

HAMPTON ROADS BANKSHARES, INC.

641 Lynnhaven Parkway

Virginia Beach, VA 23452

NOTICE OF 2012 ANNUAL MEETING OF SHAREHOLDERS

To Be Held on: December 26, 2012

To Our Shareholders:

NOTICE IS HEREBY GIVEN that the 2012 Annual Meeting of Shareholders of Hampton Roads Bankshares, Inc. (the “Company”) will be held at Dominion Tower, 999 Waterside Drive, Suite 400, Norfolk, VA 23510 on December 26, 2012, at 9:00 a.m. for the following purposes:

Shareholders of record at the close of business on November 19, 2012, will be entitled to notice of and to vote at the Annual Meeting and any adjournments thereof.

The Board of Directors unanimously recommends that shareholders vote FOR approval of each of the above items.

November 26, 2012

IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. PLEASE SIGN, DATE, AND RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE PROMPTLY OR YOU MAY VOTE YOUR SHARES ONLINE AT HTTP://WWW.RTCOPROXY.COM/HMPR OR BY CALLING 1-866-627-2415. IF YOU ATTEND THE MEETING, YOU MAY VOTE YOUR SHARES IN PERSON, EVEN THOUGH YOU HAVE PREVIOUSLY SIGNED AND RETURNED YOUR PROXY OR VOTED ONLINE OR BY TELEPHONE.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON DECEMBER 26, 2012:

The Proxy Statement and the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 are available at: http://www.snl.com/irweblinkx/docs.aspx?iid=4066242.

HAMPTON ROADS BANKSHARES, INC.

641 Lynnhaven Parkway

Virginia Beach, VA 23452

PROXY STATEMENT

This proxy statement is being furnished to the shareholders of Hampton Roads Bankshares, Inc. (the “Company”) in connection with the solicitation of proxies by the board of directors (the “Board of Directors” or the “Board”) on behalf of the Company for use at its 2012 Annual Meeting of Shareholders to be held on December 26, 2012 (the “Annual Meeting”), at the time and place described in the accompanying Notice of Annual Meeting and at any adjournment thereof (the “Proxy Statement”). This Proxy Statement and the enclosed proxy card are being mailed to the shareholders of the Company on or about November 26, 2012.

The holders of Company Common Stock, par value $0.01 per share (“Common Stock”), as of the close of business on the record date, November 19, 2012, will be entitled to be present and to vote at the Annual Meeting. Each share of our Common Stock is entitled to one vote on each matter to be voted at the meeting. There are no other classes of our stock entitled to vote at the meeting. On November 19, 2012, there were 170,278,452 shares of our Common Stock outstanding and entitled to vote. To have a quorum that permits us to conduct business at the Annual Meeting, we require the presence, whether in person or through the prior submission of a proxy, of the holders of Common Stock representing a majority of the shares outstanding and entitled to vote on the record date. The Board of Directors requests that you execute and return the proxy promptly or vote online or by telephone, whether or not you plan to attend the meeting.

The persons named in the proxy card to represent shareholders who are present by proxy at the meeting are Stephen P. Theobald, Executive Vice President and Chief Financial Officer, and Thomas B. Dix, III, Secretary.

Use and Revocation of Proxies

If the enclosed proxy is properly executed in time for voting at the Annual Meeting, the shares represented thereby will be voted according to such instructions. If no instructions are given in an executed proxy, the proxy will be voted in favor of all matters up for consideration at the Annual Meeting and in the discretion of the proxy holders as to any other matters which may properly come before the meeting. Proxies will extend to, and will be voted at, any properly adjourned session of the Annual Meeting, unless otherwise revoked.

Execution of a proxy will not affect a shareholder’s right to attend the Annual Meeting and to vote in person. Any shareholder who has voted but for any reason desires to revoke such vote may do so at any time before the proxy is exercised by filing with the Secretary of the Company an instrument revoking it, executing and returning a proxy bearing a later date, submitting a later-dated vote online or by telephone or by attending the Annual Meeting and voting in person.

Solicitation of Proxies

We will bear the cost of soliciting proxies, which will be solicited primarily by mail. Proxies may also be solicited by our directors and employees personally, and by telephone, facsimile, or other means. No additional compensation will be paid to these individuals for proxy

solicitation nor is it expected to result in more than a minimal cost to us. We may make arrangements directly with banks, brokerage houses, custodians, nominees and fiduciaries to forward solicitation material to the beneficial owners of our Common Stock held of record by them and to obtain authorization for the execution of proxies. We expect to reimburse these institutional holders for their reasonable expenses in connection with these activities.

Abstentions and Broker Non-Votes

A shareholder may abstain or (only with respect to the election of directors) withhold his vote (collectively, “Abstentions”) with respect to each item submitted for shareholder approval. Abstentions will be counted for purposes of determining the existence of a quorum. Abstentions will not be counted as voting in favor of or against the relevant item.

A broker who holds shares in “street name” has the authority to vote on certain items when it has not received instructions from the beneficial owner. Except for certain items for which brokers are prohibited from exercising their discretion, a broker is entitled to vote on matters presented to shareholders without instructions from the beneficial owner. “Broker shares” that are voted on at least one matter will be counted for purposes of determining the existence of a quorum for the transaction of business at the Annual Meeting. Where brokers do not have or do not exercise such discretion, the inability or failure to vote is referred to as a “broker non-vote.” Under the circumstances where the broker is not permitted to, or does not, exercise its discretion, assuming proper disclosure to the Company of such inability to vote, broker non-votes will not be counted as voting in favor of or against the particular matter. A broker is prohibited from voting on the Amended and Restated Articles of Incorporation, the adjournment of the meeting, the election of directors, and the advisory vote on executive compensation without instructions from the beneficial owner; therefore, there may be broker non-votes on Proposals 1, 2, 3 and 5. A broker may vote on the ratification of the independent public accountants; therefore, no broker non-votes are expected to exist in connection with Proposal 4. Abstentions and broker non-votes will not count as votes cast and will have no effect on the outcome of Proposals 2, 3, 4 and 5. Abstentions and broker non-votes will have the effect of a vote AGAINST Proposal 1 to approve the Amended and Restated Articles of Incorporation.

QUESTIONS AND ANSWERS ABOUT

THE ANNUAL MEETING AND THIS PROXY STATEMENT

Why did you send me this Proxy Statement?

We sent you this Proxy Statement and the enclosed proxy card because the Board of Directors is soliciting your proxy vote at the Annual Meeting. This Proxy Statement summarizes information on the proposals to be considered at the Annual Meeting.

When is the Annual Meeting?

Wednesday, December 26, 2012, at 9:00 a.m., Eastern Time.

Where will the Annual Meeting be held?

Dominion Tower, 999 Waterside Drive, Suite 400, Norfolk, VA 23510.

What items will be voted upon at the Annual Meeting?

You are voting on the following proposals:

How do I vote by proxy?

We offer multiple alternative methods of voting your proxy:

If you sign, date and return your proxy card before the Annual Meeting, your shares will be voted as you direct. You may vote “for” or “against” or you may abstain (or with respect to the election of directors, withhold) from voting on each proposal identified herein. If you return your signed proxy card but do not specify how you want to vote your shares, your shares will be voted “FOR” each action to be voted on at the Annual Meeting.

Your telephone or Internet vote authorizes the named proxies to vote your shares in the same manner as if you had returned your proxy card. We encourage you to use these cost-effective and convenient methods of voting, 24 hours a day, 7 days a week.

How many votes are required?

Proposal One – Amendment and Restatement of the Articles of Incorporation. The Amended and Restated Articles of Incorporation will be approved if a quorum is present and a majority of all votes entitled to be cast on the proposal vote in favor of this proposal. Brokers will not be able to vote your shares with respect to the Amended and Restated Articles of Incorporation if you have not provided them with voting instructions. Abstentions, failures to vote and broker non-votes will have the same effect as a vote against the proposal.

Proposal Two – Adjournment of the Meeting. The adjournment of the 2012 Annual Meeting to a later date to permit the declaration of effectiveness of the Amended and Restated Articles of Incorporation by the Commonwealth of Virginia State Corporation Commission before the election of directors will be approved if a quorum is present and a majority of the votes cast at the meeting vote in favor of this proposal. Neither abstentions nor broker non-votes will be counted as votes cast for purposes of determining whether the proposal has received sufficient votes for approval.

Proposal Three – Election of directors. The election of any of the nominees to the Board of Directors will be approved if a quorum is present and if there is an affirmative vote of a plurality of the shares represented at the meeting. Brokers will not be able to vote your shares with respect

to the election of directors if you have not provided them with voting instructions. Abstentions and broker non-votes will not be counted as either an affirmative vote or a negative vote regarding the election of directors, and therefore will have no legal effect on the election of directors.

Proposal Four – Ratification of Accountants. The ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2012 will be approved if a quorum is present and a majority of the votes cast at the meeting vote in favor of this proposal. Neither abstentions nor broker non-votes will be counted as votes cast for purposes of determining whether the proposal has received sufficient votes for approval.

Proposal Five – Advisory vote on executive compensation. The compensation of the named executive officers under this proposal will be approved if a quorum is present and a majority of the votes cast at the meeting vote in favor of this proposal. Neither abstentions nor broker non-votes will be counted as votes cast for purposes of determining whether the proposal has received sufficient votes for approval.

What is the effect of abstentions and broker non-votes?

The inspector will treat valid proxies marked “abstain” or proxies required to be treated as broker “non-votes” as present for purposes of determining whether there is a quorum at the Annual Meeting. A broker “non-vote” occurs when a broker or nominee holding shares for a beneficial owner votes on one proposal, but does not vote on another proposal because the broker or nominee does not have discretionary voting power and has not received instructions from the beneficial owner of the shares. Abstentions and broker non-votes will have no effect on the outcome of Proposals 2, 3, 4 and 5, but will have the effect of a vote against Proposal 1 to approve the Amended and Restated Articles of Incorporation.

Brokers may vote on routine matters but do not have discretionary power to vote your shares on “non-routine” matters unless the broker receives appropriate instructions from you. The election of directors, the declassification of the Board of Directors and the advisory vote on executive compensation are considered “non-routine” matters. Therefore, we strongly urge you to vote your shares.

What constitutes a “quorum” for the Annual Meeting?

We require the presence, whether in person or through the prior submission of a proxy, of the holders of Common Stock representing a majority of the shares outstanding and entitled to vote on the record date. A quorum is necessary to conduct business at the Annual Meeting. Because there were 170,278,452 shares of Common Stock issued and outstanding as of November 19, 2012, at least 85,139,227 shares must be present or represented by proxy at the Annual Meeting for a quorum to exist.

Who can vote?

You are entitled to vote your Common Stock if our records show that you held your shares as of the close of business on November 19, 2012, the record date for the Annual Meeting. On that date, there were 170,278,452 shares of Common Stock outstanding and entitled to vote. The Common Stock is our only class of outstanding voting securities for purposes of the Annual Meeting.

Who pays for the solicitation of proxies?

This Proxy Statement is being furnished in connection with the solicitation of proxies by our Board of Directors. We will pay the cost of preparing, printing and mailing material in connection with this solicitation of proxies. In addition to being solicited through the mails, proxies may be solicited personally or by telephone, facsimile or email by our officers, directors or employees who will receive no additional compensation for such activities. Arrangements will also be made with brokerage houses and other custodians, nominees and fiduciaries to forward solicitation materials to the beneficial owners of shares held of record by such persons. Such brokerage houses and other custodians, nominees and fiduciaries will be reimbursed for their reasonable expenses incurred in connection therewith.

Are there any dissenters’ rights or appraisal rights?

Under the Virginia Stock Corporation Act, the shareholders are not entitled to dissenters’ rights or appraisal rights with respect to any of the proposals.

What is the voting recommendation of the Board?

The Board of Directors recommends a vote “FOR” all of the Proposals included in this Proxy Statement.

Where can I find the voting results?

We will publish the voting results of the Annual Meeting on a Current Report on Form 8-K within 4 business days after the date of the meeting. You will be able to find such Form 8-K at the Investor Relations section of our website at: http://www.snl.com/irweblinkx/docs.aspx?iid=4066242

Whom should I contact if I have any questions?

If you have any questions before you vote, please contact Stephen P. Theobald, Executive Vice President and Chief Financial Officer, or Thomas B. Dix, III, Secretary, at Hampton Roads Bankshares, Inc., 641 Lynnhaven Parkway, Virginia Beach, VA 23452 at (757) 217-1000.

PROPOSAL ONE:

APPROVAL OF THE COMPANY’S AMENDED AND RESTATED ARTICLES OF INCORPORATION

The Company’s articles of incorporation currently consist of the Amended and Restated Articles of Incorporation, as filed with the Virginia Secretary of State on December 19, 2008, then further amended on December 29, 2008, July 27, 2009, December 14, 2009, September 28, 2010, April 27, 2011 and June 25, 2012 (the “Current Articles”). The Board recommends adoption of the proposed Amended and Restated Articles (the “Restated Articles”), which reflect the changes described below.

Declassification of the Board of Directors

The Current Articles divide the Board of Directors into three classes. Each class is elected for a three-year term, with the terms staggered so that approximately one-third of directors, plus any newly appointed directors, stands for election each year.

The Restated Articles would declassify the Board and require each director nominee to be elected annually for a one-year term. Under the Restated Articles, the annual election of all directors would be phased in over a three-year period, commencing immediately with the election of the director nominees at this 2012 annual meeting as provided for below under Proposal 3. Declassification would not result in the curtailment of any director’s term of office. Rather, all current directors would complete their present terms. Directors whose term expires at the 2013 and 2014 annual meetings of shareholders would be nominated for election for one-year terms. Beginning with the 2014 annual meeting, all director nominees would be nominated for election for one-year terms.

In the past, the company’s various Boards of Directors have believed that a classified board structure served the best interests of the Company and its shareholders. A classified board can provide for company and board continuity and stability. However, in light of recent trends in corporate governance, the Board reviewed its position on classified boards. While the Company’s Board still recognizes the potential benefits of classified boards, it is also committed to ensuring maximum Board accountability to our shareholders, and Board declassification would provide shareholders with the opportunity to register their views at each annual meeting on the performance of the entire Board over the prior year.

Therefore our Board concluded that amending the Current Articles to provide for the annual election of all directors in the manner set forth above would be in the best interests of the Company and our shareholders.

Article IV(b) of the Restated Articles governs the term length of the Company’s directors. The text of this provision, which shows the changes made to the revisions to the provision as it appears in the Current Articles, is attached as Appendix A.

Other Changes

Article III – Capital Stock. The Restated Articles delete provisions in this Article providing for the Company’s 2011 reverse stock split. These provisions were no longer necessary once the reverse stock split was consummated and therefore their removal would have no impact. The Restated Articles also delete those provisions of Article III that set the terms of the Company’s Series A, Series B, Series C and Series C-1 preferred stock. None of these series of preferred stock are outstanding at this time and the Company does not intend to issue shares of preferred stock with the terms provided for under the Series A, Series B, Series C or Series C-1 preferred stock terms set forth in the Current Articles in the future. The Restated Articles retain and do not alter the Board’s right to set the preferences, limitations and relative rights of new series or classes of preferred stock without shareholder approval. The deletion of the stock split and preferred stock terms from Article III is intended to simplify the Restated Articles by removing irrelevant provisions.

Former Article IV – Registered Agent and Registered Office. Article IV of the Current Articles has been deleted from the Revised Articles because the Company is no longer required to include its registered agent or registered office in its articles of incorporation. This provision has been updated to reflect the change of the Company’s principal office address following the relocation to its new corporate headquarters.

Other immaterial changes. The Restated Articles consolidate into a single document the original amended and restated articles of incorporation and the separate amendments thereto as applicable. The Restated Articles also delete Schedule A and Schedule B to the Current Articles, which were incorporated into the deleted provisions of Article III to set forth additional terms of certain of the series of preferred stock deleted from Article III, as discussed above. Ministerial changes were also made to update the numbering of the Articles and internal references to the Articles to account for the deletion of former Article IV.

The description set forth above is only a summary of the proposed changes to the Company’s articles of incorporation and is qualified in its entirety by reference to Appendix A. Please refer to Appendix A attached to this Proxy Statement to review the full text of the Restated Articles.

Vote Required

Adoption of an amendment to our Articles of Incorporation requires approval by a majority of all votes entitled to be cast on the proposal. Brokers will not be able to vote your shares with respect to the Restated Articles if you have not provided them with voting instructions. Abstentions, failures to vote and broker non-votes will have the same effect as a vote against the proposal.

If approved by the shareholders, the Restated Articles would become effective upon the filing of Articles of Amendment with the State Corporation Commission of the Commonwealth of Virginia. To ensure that the benefits of declassifying the Board are not delayed, if this Proposal 1 is approved by the shareholders, the Chairman of the Board will adjourn the annual meeting, if such adjournment is approved by the shareholders under Proposal 2 below, to permit the filing and effectiveness of the Restated Articles. Once the Restated Articles are effective, the Chairman of the Board will reconvene the annual meeting and proceed with the election of directors to one-year terms under Proposal 3.

If this proposal does not receive the required number of votes in favor, the Articles of Incorporation will not be amended and restated and all directors will continue to serve three-year terms.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE PROPOSED AMENDED AND RESTATED ARTICLES OF INCORPORATION.

PROPOSAL TWO

ADJOURNMENT OF THE MEETING

In the event that the Company’s shareholders approve Proposal 1 to approve the Amended and Restated Articles of Incorporation of the Company, the Company has submitted the question of adjournment to its shareholders as a separate matter for their consideration. The purpose of the adjournment is to permit the filing and effectiveness of the Restated Articles. While the Company’s Bylaws provide that the Board of Directors has the power to adjourn the Annual Meeting, the Board determined that submitting this proposal to the Company’s shareholders is in the best interests of the Company. Once the Restated Articles are effective, the Chairman of the Board will reconvene the annual meeting and proceed with the election of directors to one-year terms under Proposal 3.

If it is necessary to adjourn a meeting, no notice of such adjourned meeting is required to be given to the Company’s shareholders, other than an announcement at the Annual Meeting of the place, date and time to which the meeting is adjourned, if the meeting is adjourned for 30 days or less.

Vote Required

The adjournment of the 2012 Annual Meeting to a later date will be approved if a quorum is present and a majority of the votes cast at the meeting vote in favor of this proposal. Neither abstentions nor broker non-votes will be counted as votes cast for purposes of determining whether the proposal has received sufficient votes for approval.

If this proposal does not receive the required number of votes in favor, the 2012 Annual Meeting will not be adjourned and Proposal 3 for the election of directors will proceed under the Current Articles. As a result the directors would be elected to the terms described below in Proposal 3.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ADJOURNMENT PROPOSAL

PROPOSAL THREE: ELECTION OF DIRECTORS

OF HAMPTON ROADS BANKSHARES, INC.

Nominees for Election

Seven directors are to be elected at the Annual Meeting. The Articles of Incorporation provide that the Company will have no less than eight and no more than twenty-four members of the Board of Directors. The Articles of Incorporation also divide the Board of Directors into three classes as nearly equal in number as possible. One class is elected at each annual meeting to serve for a specified term. As more fully described above under “Proposal 1: Approval of the Company’s Amended and Restated Articles of Incorporation,” the Board of Directors has adopted, subject to shareholder approval, an Amended and Restated Articles of Incorporation that would eliminate the classified Board of Directors. If Proposal 1 and Proposal 2 are approved by the shareholders, the seven directors elected at the annual meeting will serve for a one-year term expiring at the Company’s annual meeting in 2012. If Proposal 1 or Proposal 2 is not approved by the shareholders, each Class B director elected at the annual meeting will serve for a three-year term expiring at the Company’s annual meeting in 2015 and each Class A director elected at the annual meeting will serve for a shortened two-year term expiring at the Company’s annual meeting in 2014, in order to make the three classes as nearly equal in number as possible. The Bylaws require all directors to be shareholders of the Company and require a majority of directors to be citizens of Virginia. All nominees were nominated by the Corporate Governance and Nominating Committee and approved by the Board of Directors.

If Proposal 1 and Proposal 2 are approved then newly elected directors will no longer be placed into classes and the directors elected at the Annual Meeting will not be members of Class A, B or C no matter which class they were members of before the Annual Meeting.

Conditional Director

One of the nominees for election, James F. Burr, (the “Conditional Class A Director”) has been appointed as a director of the Company by the Board of Directors effective on the receipt of approval from banking regulatory authorities. In the event that such approval is received for Mr. Burr before the date of the Annual Meeting, his appointment will be immediately effective and he will stand as a director nominated for reelection at the Annual Meeting. If Mr. Burr does not receive regulatory approval before the Annual Meeting, he will still stand for election at the Annual Meeting but, if approved by the shareholders, his term would not begin until such time as he has received the necessary regulatory approvals.

DIRECTORS AND DIRECTOR NOMINEES

The following biographical information discloses each director’s and director nominee’s age, business experience, and other directorships held during the past five years. It also includes the experiences, attributes, and skills that caused the nominating committee and the Board of Directors to determine that the individual should serve as a director for the Company and the year that each individual was first elected to the Board of Directors of the Company or previously to the Board of Directors of Bank of Hampton Roads, the predecessor to and now a wholly-owned subsidiary of the Company. Unless otherwise specified, each nominee has held his current position for at least five years.

The election of each nominee requires the affirmative vote of a plurality of the votes cast by the shares entitled to vote. Proxies received from Company shareholders will be voted for the election of such nominees unless marked to the contrary. A shareholder of the Company who desires to withhold voting of the proxy for all or one or more nominees may so indicate on his or her proxy. All of the nominees currently are members of the Company’s Board of Directors and all have consented to be named and have indicated their intent to serve if elected. If any nominee becomes unable to serve, an event which is not anticipated, the proxy will be voted for a substitute nominee to be designated by the Company’s Board of Directors, or the number of directors will be reduced.

Nominees for Election of “Class B” Directors with Terms Expiring in 2013 if Proposal 1 and Proposal 2 are Approved; with Terms Expiring in 2015 if Proposal 1 or Proposal 2 is Not Approved

Patrick E. Corbin, 58, Director since 2009

Mr. Corbin is the Managing Shareholder of Corbin & Company, P.C. He has been a Certified Public Accountant since 1979. He is a member of professional organizations including the American Institute of Certified Public Accountants, the Virginia Society of Certified Public Accountants, and the Tidewater Virginia Society of Certified Public Accountants. He is a director and past chairman of the Chesapeake Alliance. He was designated as “Super CPA” by Virginia Business magazine in the fields of litigation support and business valuation for the years 2002-2011. Mr. Corbin brings significant experience to the Board in the fields of accounting and small business expertise.

Henry P. Custis, Jr., 67, Director since 2008

Mr. Custis is currently the Chairman of the Company’s Board of Directors, a position he has held since 2010. Mr. Custis is a Partner at Custis, Lewis & Dix, a law firm in Accomac, Virginia. He has practiced law since 1970. He was chairman of the board of Shore Bank until its merger with the Company on June 1, 2008 and currently serves as chairman of Shore Bank, a position he has held since 1997. He has practiced law for 39 years, served on bank boards for 36 years, and been an investor for 35 years.

Douglas J. Glenn, 46, Director since 2006

Mr. Glenn is President and Chief Executive Officer of the Company and Chief Executive Officer of Bank of Hampton Roads. He was appointed Executive Vice President and General Counsel of the Company and Bank of Hampton Roads in 2007. He added the responsibilities of Chief Operating Officer of the Company in February 2009. He was named Interim President and Chief Executive Officer of the Company and Bank of Hampton Roads in August 2011 and became President and Chief Executive Officer in February 2012. Prior to joining the Company, Mr. Glenn practiced law at Pender & Coward, P.C. in Virginia Beach, Virginia. His law practice was focused primarily on small business clients and clients involved in various aspects of real estate. His knowledge of small business and real estate finance and legal issues are valuable attributes for the Company’s Board of Directors.

William A. Paulette, 65, Director since 2009

Mr. Paulette was a director of Gateway Bank and Trust Co. until its merger with the Company on December 31, 2008 and was a director of Bank of Richmond from 1998 to 2007. He has served on the board of Virginia Military Institute since 2003. He is founder, President, and CEO of KBS, Inc., a construction firm based in Richmond, Virginia. He is responsible for the general management of KBS including its financial success. Mr. Paulette brings substantial knowledge of the construction business and the Richmond market.

Billy G. Roughton, 68, Director since 2008

Mr. Roughton was a director of Gateway Financial Holdings, Inc. (“Gateway”) until its merger with the Company on December 31, 2008 and was Chairman of the Board of Gateway Bank & Trust Co, Inc. (“Gateway Bank”) until May 2009. He is President and CEO of BGR Development, a company that develops and manages both residential and commercial real estate, positions he has held since 1974. He also is Dealer Principal, President, and CEO of JEB Management Services, Inc., doing business as Alliance Nissan, which is a franchised automobile dealership, positions he has held since 2009. In addition, Mr. Roughton is the Managing Partner of various companies involved in real estate development and project management for both residential and commercial real estate. He is directly involved in the management of the business ventures including, among other aspects, personnel management, financing, project cash flow, permit acquisition, operations, and overall viability and corporate stability. Mr. Roughton has substantial knowledge of the market for residential and commercial real estate and of participants in the market on the Outer Banks area of North Carolina.

Nominee for Election of “Class A” Director with Term Expiring in 2013 if Proposal 1 and Proposal 2 are Approved; with Terms Expiring in 2014 if Proposal 1 or Proposal 2 is Not Approved

Charles M. Johnston, 57, Director since 2012

Mr. Johnston served as Chief Financial Officer of Eastern Bank Corporation, an $8 billion bank holding company headquartered in Boston, from 2003 until his retirement in March, 2012. He was Chief Financial Officer of Commonwealth Bancorp, a $2 billion bank holding company headquartered in Philadelphia, from 1996 until its sale to Citizens Financial Group in 2003. From 1994 to 1996, he was Chief Financial Officer of TFC Enterprises, an auto finance company headquartered in Norfolk, Virginia. Previously, he served in Treasury, Financial Planning and Investor Relations roles at Mellon Bank Corporation and Treasury, Accounting and Internal Audit roles at United States Steel Corporation. As a former executive of numerous financial institutions, Mr. Johnston brings extensive experience and knowledge of the banking and financial services industry to the Company’s Board. His experience and qualifications in financial and risk management led the Company to believe that he is highly qualified to serve on the Company’s Board.

Nominee for Election of “Conditional Class A” Director with Term Expiring in 2013 if Proposal 1 and Proposal 2 are Approved; with Term Expiring in 2014 if Proposal 1 or Proposal 2 is Not Approved

James F. Burr, 46, Director since 2012 (if approved by banking regulatory authorities before the Annual Meeting)

Mr. Burr is currently a managing director in the Global Financial Services Group of The Carlyle Group (“Carlyle”), a position he has held since July 2008. From 2006 to 2008, Mr. Burr served as Corporate Treasurer of Wachovia Bank, where he was responsible for activities relating to funding, investing, risk transference, balance sheet management, liquidity and capital usage. Previously, Mr. Burr had served in various other roles at Wachovia since he began there in 1992, including Assistant Treasurer, Controller of the Corporate and Investment Bank, Product Controller of Treasury/Balance Sheet Management and Structured Products and Mortgage Analyst. Mr. Burr began his career at Ernst & Young, where he was a C.P.A. focused on banking and computer audit issues. Mr. Burr was designated to the Company’s Board of Directors by an affiliate of Carlyle pursuant to the terms of the Investment Agreement between the Company and Carlyle, and is being nominated to continue as a director in accordance with the requirements of that Investment Agreement. Mr. Burr also serves on the Board of Directors of Central Pacific Financial Corp. Mr. Burr has more than 20 years of banking and accounting experience, which gives him unique insight into the various regulatory and financial issues facing banking organizations. His experiences at Carlyle and Wachovia have earned him a respected reputation in the banking industry and the Company believes he would be an invaluable asset to the Company’s Board.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS

VOTE “FOR” THE NOMINEES LISTED ABOVE.

Incumbent “Class C” Directors with Terms Expiring in 2013

Robert B. Goldstein, 72, Director since 2010

Robert B. Goldstein is a founding Principal in CapGen Capital Advisers, a private equity fund that invests in banks and financial service companies. Mr. Goldstein was designated to the Company’s Board of Directors by an affiliate of CapGen pursuant to the Investment Agreement between the Company and CapGen, and is being nominated to continue as a director in accordance with the requirements of that Investment Agreement. His experience includes many years in commercial banks, savings and loan associations, and other financial institutions. Over the years, he has been CEO of numerous banks and thrift banks, and on the boards of directors as both a management member as well as serving as an independent director. The institutions range in size from small to large cap and have been located in various geographic areas. Mr. Goldstein draws from a team of highly experienced bankers who bring skills in such diverse areas as risk management, asset quality administration, audit, finance, and marketing.

In addition to his role as a Director of both BankFIRST and as Chairman of the board of The BANKshares, Inc, Goldstein is a Founding Principal of CapGen Capital Advisers; serves on the Board of Directors of FNB Corporation, Hermitage, PA; serves on the Board of Directors of Seacoast Banking Corporation and Seacoast National Bank, Stuart, FL; as well as on the board of Palmetto Bancshares, Inc. and Palmetto Bank, Greenville, SC; and is a member of the Executive Network of Glencoe Capital LLC of Chicago, IL.

Hal F. Goltz, 29, Director since 2010

Mr. Goltz was designated to the Company’s Board of Directors by an affiliate of Anchorage Advisors pursuant to the terms of the Investment Agreement between Anchorage and the Company, and is being nominated to continue as a director in accordance with the requirements of that Investment Agreement. Mr. Goltz is currently a Senior Analyst at Anchorage Advisors, a position which he has held since October 2007. From June 2004-June 2007, he was an Event-Driven Analyst of Citadel Investment Group. Mr. Goltz has significant experience in the financial services industry and experience with distressed financial institutions.

Incumbent “Class A” Director with Term Expiring in 2014

W. Lewis Witt, 70, Director since 2001

Mr. Witt has been the owner and president of Inner-view, Ltd., a utility contractor, since September 1976 and has been the owner of Greenbrier Self Storage since 1997. Mr. Witt’s involvement with utility contracting acquaints him with a wide network of community officials and other contractors. He is knowledgeable regarding the South Hampton Roads real estate and development market and many of its participants.

NON-DIRECTOR EXECUTIVE OFFICERS

(INCLUDING NAMED EXECUTIVE OFFICERS)

The following sets forth the names, ages, and business experience for the past five years of the Company’s executive officers (including named executive officers pursuant to Item 402 of Regulation S-K), other than the ones listed under “Directors” above.

Family relationships

There are no family relationships between any director, executive officer, or person nominated or chosen by the Company to become a director or executive officer.

BENEFICIAL OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS,

AND PRINCIPAL SHAREHOLDERS OF THE COMPANY

The following table sets forth for (1) each director and the executive officers named in the Summary Compensation Table, (2) all directors and executive officers as a group, and (3) each beneficial owner of 5% or more of our Common Stock: (i) the number of shares of Common Stock beneficially owned on November 5, 2012, and (ii) such person’s or group’s percentage ownership of outstanding shares of Common Stock on such date. All of the Company’s directors

and executive officers receive mail at the Company’s principal executive office at Attn: Douglas J. Glenn, President and Chief Executive Officer at Hampton Roads Bankshares, Inc., 641 Lynnhaven Parkway, Virginia Beach, VA 23452.

This table is based upon information supplied by officers, directors, and principal shareholders. Unless indicated in the footnotes to this table and subject to community property laws where applicable, the Company believes that each of the shareholders named in this table has sole voting and investment power with respect to the shares indicated as beneficially owned.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires directors, executive officers, and persons who beneficially own more than 10% of the Company’s Common Stock to file initial reports of ownership and reports of changes in beneficial ownership with the SEC. Such persons are also required to furnish the Company with copies of all Section 16(a) forms they file.

Based solely on a review of the copies of such forms furnished to the Company, the Company believes that all Section 16(a) filing requirements applicable to its directors, executive officers, and greater than 10% beneficial owners were complied with in 2011, with the exception of a Form 3 for Thomas W. Mears for a January 3, 2011 transaction that was inadvertently late-filed on June 19, 2012, and Form 4s for William A. Paulette for a March 3, 2011 transaction that was inadvertently late-filed on July 8, 2011, Kevin W. Pack for a June 9, 2011 transaction that was inadvertently late-filed on August 24, 2011, Patrick E. Corbin for an August 23, 2011 transaction that was inadvertently late-filed on August 30, 2011, Henry P. Custis, Jr. for a November 9, 2011 transaction that was inadvertently late-filed on November 14, 2011, and Robert J. Bloxom for an August 24, 2011 transaction that was inadvertently late-filed on June 19, 2012.

CORPORATE GOVERNANCE

Director Independence

The Board is comprised of a majority of independent directors as defined by the NASDAQ listing standards. The Board of Directors in its business judgment has determined that the following of its members and director nominees are independent as defined under the NASDAQ Stock Market’s listing standards: Patrick E. Corbin, Henry P. Custis, William A. Paulette, W. Lewis Witt, Hal F. Goltz, Robert B. Goldstein, Charles M. Johnston and James F. Burr. In reaching this conclusion, the Board of Directors considered that the Company and its subsidiaries provide services to, and otherwise conduct business with, certain members of the Board of Directors or members of their immediate families or companies with which members of the Board of Directors are affiliated. These transactions are discussed in greater detail in the “Certain Relationships and Related Transactions” section of this Proxy Statement.

Based on these standards, the Board of Directors determined that Billy Roughton was not independent because he owns two branches in North Carolina. This transaction is discussed in greater detail in the “Certain Relationships and Related Transactions” section of this Proxy Statement. Except for Billy Roughton, none of our non-employee directors, their immediate family members, or employees, are engaged in such relationships with us.

The Board of Directors considered the following transactions between us and certain of our directors or their affiliates and determined that such transactions did not impair the director’s independence under the above standard:

Committees

The Company currently has separate Audit, Compensation, and Nominating Committees which are composed of directors who are each an “independent director” as that term is defined under the NASDAQ Stock Market’s listing standards and the requirements of the SEC.

Audit Committee

The Audit Committee consists of Patrick E. Corbin, William A. Paulette, W. Lewis Witt and Charles M. Johnston. The Board of Directors has determined that all of these directors are “independent directors” as that term is defined under the NASDAQ Stock Market’s listing standards and the requirements of the SEC.

The Audit Committee and the Board of Directors has determined that Patrick E. Corbin met the qualifications of an “Audit Committee Financial Expert” as defined under final rules adopted by the SEC. The Audit Committee’s charter appears on the Company’s website at http://www.snl.com/irweblinkx/corporateprofile.aspx?iid=4066242.

The Audit Committee is responsible for the appointment, compensation, and oversight of the work of the independent registered public accounting firm of the Company. It also must pre-approve all audit and non-audit services provided by the independent registered public accounting firm. The Audit Committee acts as the intermediary between the Company and the independent registered public accounting firm and reviews the reports of the independent registered public accounting firm. The Audit Committee held 7 meetings in 2011. See “Audit Committee Report” below.

Audit Committee Report

The Audit Committee reviews the Company’s financial reporting process, including internal control over financial reporting, on behalf of the Board of Directors. As required by the Audit Charter, each Audit Committee member satisfies the independence and financial literacy requirements for serving on the Audit Committee, and at least one member has accounting or related financial management expertise, all as stated in the NASDAQ rules.

Management has the primary responsibility for the consolidated financial statements and the reporting process, including internal control over financial reporting. In this context, the Audit Committee has met and held discussions with management and the independent registered public accounting firm. Management represented to the Audit Committee that the Company’s consolidated financial statements were prepared using U.S. generally accepted accounting principles (“GAAP”). The Audit Committee has reviewed and discussed the consolidated financial statements with management and the independent registered public accounting firm.

The Audit Committee discussed with the independent registered public accounting firm matters required to be discussed by Statement on Auditing Standards No. 61, Communication with Audit Committees, as amended, including their judgment about the quality, not just the acceptability, of the Company’s accounting principles and underlying estimates in the Company’s consolidated financial statements; all critical accounting policies and practices to be used; all alternative treatments within GAAP for policies and practices related to material items that have been discussed with management of the Company; and other material written communications between the independent registered public accounting firm and the management of the Company, such as any management letter or schedule of unadjusted differences. In addition, the Audit Committee has discussed with the independent registered public accounting firm its independence from the Company and its management, including the matters in the written disclosures required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit

Committee concerning independence. The Audit Committee discussed with the Company’s internal and independent registered public accounting firm the overall scope and specific plans for their respective audits.

The Audit Committee meets with the internal and independent registered public accounting firm to discuss the results of their audits, the evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting. The meetings also are designed to facilitate any private communications with the Audit Committee desired by the internal auditors or independent registered public accounting firm. In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors, and the Board has approved, that the audited consolidated financial statements of the Company be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011, as amended, for filing with the SEC.

Patrick E. Corbin

Charles M. Johnston

William A. Paulette

W. Lewis Witt

Compensation Committee

The Compensation Committee consists of Patrick E. Corbin, Henry P. Custis, Jr., Robert B. Goldstein, Hal F. Goltz and W. Lewis Witt, all of whom the Board of Directors has determined to be independent under standards set by the NASDAQ Stock Market. The committee met 2 times in 2011.

The Compensation Committee reviews the compensation of all executive officers, determines the compensation package for the Chief Executive Officer, and administers the Company’s compensation programs. See “Compensation Discussion and Analysis” and “2011 Compensation Committee Report” for further discussion.

The charter of the Compensation Committee appears on the Company’s website at http://www.snl.com/irweblinkx/corporateprofile.aspx?iid=4066242.

Corporate Governance and Nominating Committee

The Corporate Governance and Nominating Committee consists of Patrick E. Corbin, Henry P. Custis, Robert B. Goldstein, Hal F. Goltz, William A. Paulette and W. Lewis Witt, all of whom the Board of Directors has determined to be independent under standards set by the NASDAQ Stock Market. The committee did not meet in 2011.

The Corporate Governance and Nominating Committee does not have a written diversity policy, however, it does give consideration to potential candidates who would promote diversity on the Board with respect to professional background, experience, and expertise.

Qualification of Directors. In evaluating candidates for election to the Board, including candidates recommended by shareholders, the Corporate Governance and Nominating Committee shall take into account the qualifications of the individual candidate as well as the composition of the Board of Directors as a whole. Among other things, the Corporate Governance and Nominating Committee considers:

Under our Bylaws, shareholders may submit nominees for director. However, there have been no material changes to the procedures by which shareholders may submit such nominees since they were last reported by the Company.

The charter of the Corporate Governance and Nominating Committee appears on the Company’s website at http://www.snl.com/irweblinkx/corporateprofile.aspx?iid=4066242.

Board’s Role in Risk Oversight

The Board of Directors is actively involved in overseeing enterprise risk, primarily under the purview of its Risk Oversight Committee. This committee was established for the purpose of assisting the board and the Chief Risk Officer in the governance of the Company’s enterprise risk management framework, including the approval of significant policies, procedures and practices employed to manage all risks in the Company and the ongoing review of Business Unit Risk Assessments conducted on a quarterly basis within each operational division of the Company. The Risk Oversight Committee serves as a forum for the discussion of strategic risk issues, the identification and mitigation of the top risks facing the Company and facilitates enhancements in the business processes and practices employed throughout operational areas.

In setting executive compensation, the Compensation Committee considers risks that may be implicated by our compensation programs and endeavors to set executive compensation that creates incentives to achieve long-term shareholder value without encouraging excessive risk taking to achieve short term results. The Compensation Committee reports its finding with explanations to the full board.

Leadership Structure

We have operated under a board leadership structure with separate roles for our Chairman of the Board and our Chief Executive Officer, although our governance documents do not require this. Historically, our Chairman of the Board is responsible for presiding over the meetings of the Board of Directors and the annual meetings of shareholders, and our Chief Executive Officer is responsible for the general management of the business, financial affairs and day-today operations of the Company. As our directors continue to have more oversight responsibility, we believe it is beneficial to have a Chairman whose focus is to lead the board and facilitate communication among directors and management. Accordingly, we believe this structure is the best governance model for the Company and our shareholders.

Information About Shareholders

The Board of Directors has not established a written policy regarding communications with shareholders. A formal policy has not been adopted because directors have periodic contact with shareholders through business, personal, and community-based activities. Although not prescribed in a policy, shareholders may communicate with the Board of Directors through written communications addressed to the Company’s executive office at Attn: Douglas J. Glenn, President and Chief Executive Officer, at Hampton Roads Bankshares, Inc., 641 Lynnhaven Parkway, Virginia Beach, VA 23452.

Board and Committee Meetings

The business of the Company is managed under the direction of the Board of Directors. The Board of Directors generally meets once a month and held 18 meetings in 2011. During 2011 each director participated in at least 75% of all Board of Directors meetings except for John A. B. Davies, Jr., who resigned from the Company’s Board of Directors effective August 12, 2011. Prior to his resignation, Mr. Davies participated in at least 75% of all Board of Directors meetings. During 2011, each director participated in at least 75% of all meetings of committees on which he served, except for Hal F. Goltz. The Board of Directors does not have a policy regarding attendance at annual shareholders’ meetings. However, directors are encouraged to attend such meetings, and at the 2011 annual meeting of shareholders, held on October 4, 2011, all then current directors were in attendance, with the exception of Randal K. Quarles, William A. Paulette and Robert B. Goldstein. All Board committee meetings are scheduled by the committee chairpersons as deemed necessary.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During fiscal year 2011, some director-nominees, directors, and executive officers of the Company, their affiliates, and members of their immediate families were customers of and had loan transactions with the Company in the normal course of business and are expected to continue to have customer relationships with the Company in the future. All outstanding loans and commitments included in such transactions were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with unrelated persons, and did not involve more than a normal risk of collectability or present other unfavorable features.

At December 31, 2011, loans to executive officers, directors, and their associates amounted to $98.1 million. During 2011, additional loans exceeded repayments of loans by executive officers, directors, and their associates by $1.71 million.

Jordan E. Slone, a former director of the Company who resigned in December 2011, is the managing member of two limited liability companies that serve as the managers for the legal entities which own and manage the Dominion Tower at 999 Waterside Drive, Norfolk, Virginia 23510. The Company currently leases the second floor and a portion of the nineteenth floor of the Dominion Tower for its executive offices and a portion of the first floor as a retail branch and financial center. Our lease, as amended, expires in September 2021. Rent payments made in 2011 totaled approximately $798,241 for the year. The payments under this lease in 2012 are expected to be approximately $828,673. It is also expected that the rent paid will exceed 5% of the gross revenues of the entities that own Dominion Tower. The terms of this lease are substantially similar to the terms of leases that are the result of “arms length” negotiations between unrelated parties, and the rent is comparable to current market rates. In the opinion of management, the payments under the Dominion Tower lease are as favorable to the Company as could have been made with unaffiliated parties.

Bank of Hampton Roads leases its Nags Head, North Carolina and one of its Kitty Hawk, North Carolina branches from Billy G. Roughton, a director of the Company, and his wife for monthly payments of $17,888 and $8,000 during 2011, respectively. Total payments under these leases in 2012 are expected to be approximately the same as in 2011. The interests of the Roughtons in these transactions are equal to the monthly lease payments. Kitty Hawk is a land lease that commenced in April 2006 for a term of twenty years, with three five-year renewals. In the opinion of management, the payments under these leases are as favorable to the Company as could have been made with unaffiliated parties.

Shore Bank leased two billboards from Richard F. Hall, III, a former director of the Company and current director and officer of Shore Bank. Total payments during 2011 were $4,800. The lease commenced in July 2006 for a term of five years. In the opinion of management, the payments under the lease are as favorable to the Company as could have been made with unaffiliated parties.

Shore Bank has a ground lease with Richard Hall, Jr., and Virginia B. Hall, the father and mother of Richard F. Hall, III, for its Onley branch. Total payments during 2011 were approximately $27,365 and the term of the lease was extended for five years commencing June 2009 with one additional five-year renewal. The payments under this lease in 2012 are expected to be approximately the same as in 2011. In the opinion of management, the payments made under the Onley branch lease are as favorable to the Company as could have been made with unaffiliated parties.

On June 27, 2012, under the terms of a Standby Purchase Agreement with the Company, an affiliate of Carlyle Financial Services Harbor, L.P. received a $1,000,000 cash fee in return for its agreement to fulfill its obligations under the Standby Purchase Agreement. Randal K. Quarles is a managing director of this entity and a former director of the Company who resigned from the board in May 2012. James F. Burr is a designee of Carlyle Financial Services Harbor, L.P.

On June 27, 2012, under the terms of a Standby Purchase Agreement with the Company, ACMO-HR, L.L.C. received a $1,000,000 cash fee in return for its agreement to fulfill its obligations under the Standby Purchase Agreement. Anchorage Advisors is affiliated with ACMO-HR, L.L.C. and Hal F. Goltz, a director of the Company, is a senior analyst of Anchorage Advisors.

On June 27, 2012, under the terms of a Standby Purchase Agreement with the Company, CapGen Capital Group VI LP received a $1,000,000 cash fee in return for its agreement to fulfill its obligations under the Standby Purchase Agreement. Robert B. Goldstein, a director of the Company, is affiliated with this entity.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Particularly during this challenging environment for banking services and the depressed market for bank stocks, our Compensation Committee and management believe that shareholder value must drive executive compensation decisions. While our compensation philosophy has been to maintain a competitive compensation package to attract qualified executive officers, we have historically had a pay-for-performance program that bases compensation decisions on the financial performance of the Company. Due primarily to economic conditions, the Company was unable to provide in fiscal 2011 the return to shareholders that management and the Board of Directors desired. As a result of continued poor economic conditions, compensation to our executive officers continued to be frozen in 2011, with bonus and stock compensation all but eliminated.

Our recent mergers have also factored into our executive compensation program. The June 1, 2008 merger combined the Company’s and Shore’s executive management teams and the December 31, 2008 merger combined the Company’s and Gateway’s management teams. Both mergers brought together different executive compensation programs. The following plans of Shore were assumed by the Company in connection with its acquisition: the Shore Financial Corp. 2001 Stock Incentive Plan and the Shore Financial Corp. 401(k) Plan (the “Shore 401(k) Plan”). The following plans of Gateway were assumed by the Company in connection with its acquisition of Gateway: the Gateway Bank and Trust Company Employee’s Savings & Profit Sharing Plan and Trust (the “Gateway 401(k) Plan”); the 1999 Incentive Stock Option Plan of Gateway Financial Holdings, Inc.; the 1999 Non-Statutory Stock Option Plan of Gateway Financial Holdings, Inc.; the 2001 Non-Statutory Stock Option Plan of Gateway Financial Holdings, Inc.; the 2005 Omnibus Stock Ownership and Long-Term Incentive Plan of Gateway Financial Holdings, Inc.; and the 1999 Bank of Richmond Stock Option Plan of Gateway Financial Holdings, Inc.

There have been several changes to these plans. The Company’s Executive Savings Plan was discontinued during 2010. On April 1, 2011, the Company converted all 401(k) plans into the Virginia Bankers Association Master Defined Contribution Plan for Hampton Roads Bankshares, Inc. (the “Plan”). On October 4, 2011, the Company’s shareholders approved the 2011 Omnibus Incentive Plan, which succeeds the Company’s 2006 Stock Incentive Plan. Amendments increasing the number of shares available for grant and raising the grant size limitations under the 2011 Omnibus Stock Incentive Plan were approved by our shareholders on June 25, 2012. The 2011 Omnibus Stock Incentive Plan provides for the grant of up to 13,675,000 shares of our Common Stock as awards to employees of the Company and its related entities, members of the Board of Directors of the Company, and members of the board of directors of any of the Company’s related entities.

During 2011, our Compensation Committee focused on retaining and attracting key executives to assist in managing though the financial challenges facing the Company. The Compensation Committee reviews the compensation, including salaries, bonuses, employee benefits, executive incentive plans, policies, practices, and programs, for the Company’s executive officers. We evaluate the performance of the Company’s Chief Executive Officer and, with the assistance of the Chief Executive Officer, the performance of the other executive officers.

Our intent is to offer compensation packages that will attract and retain high quality personnel for our organization. We want to provide our employees with incentives that will align their interests with the long-term and short-term goals of the organization as a whole. Several components of our compensation packages include vesting periods and stock ownership that are designed to promote loyalty and longevity among employees. We wish to reward those employees who are excelling in their respective positions and, by so doing, enhance the future profitability of our Company.

Changing Regulatory Environment

Our compensation programs during 2011 were also impacted by our participation in the CPP of the United States Department of the Treasury’s TARP. As a result of participation in TARP, our executives and certain of our employees were subject to compensation related limitations and restrictions, which will continue to apply so long as the Treasury holds the Common stock it received in return for the financial assistance it provided us (disregarding any warrants to purchase our Common Stock that the Treasury may hold). The TARP compensation limitations and restrictions include:

On June 21, 2010, the Federal Reserve, the Office of the Comptroller of the Currency, the FDIC, and the Office of Thrift Supervision issued guidance on sound incentive compensation policies. The guidance includes three broad principles:

The guidance was immediately effective under the agencies’ power to regulate the safety and soundness of financial institutions. The guidance applies to all U.S. financial institutions.

As required by TARP and consistent with the other regulatory guidance mentioned above:

The Company’s agreements with Douglas J. Glenn, authorize the Company or the applicable subsidiary of the Company to amend his or her compensation, bonus, incentive, and other benefit plans and arrangements and agreements as necessary to comply with the requirements of Section 111(b) of the EESA and the Treasury’s CPP and waives any and all claims against the Treasury and against the Company for those changes that the Company shall make to its compensation and benefit programs to allow the Company to comply with Section 111(b) of EESA in conjunction with its participation in the Treasury’s CPP.

Our Board also adopted an “Excessive or Luxury Expenditure Policy” that is consistent with the TARP requirements and that can be found on the Company’s website. This policy, which applies to all our employees, covers expenditures for entertainment or events, office and facility renovations, aviation or other transportation services, and other activities or events. These expenditures are prohibited excessive or luxury expenditures to the extent they are not reasonable expenditures for staff development, reasonable performance incentives, or other similar reasonable measures conducted in the normal course of the Company’s business operations.

In addition to the TARP executive compensation restrictions described above, the Company is prohibited, under section 18(k) of the Federal Deposit Insurance Act and 12 C.F.R. Part 359, from making any severance or indemnification payments to its employees for so long as Bank of Hampton Roads or the Company remain in troubled condition under applicable federal regulations. To the extent that our arrangements, plans, or other arrangements described herein provide for severance or indemnification payments, we may be prohibited from making such payments by 12 C.F.R. Part 359.

W. Thomas Mears and Michael J. Sykes were not subject to the above referenced TARP limitations on the payment of performance-based bonuses and other incentive payments during 2011. Both Mr. Mears and Mr. Sykes received incentive compensation during 2011 as discussed in more detail below. In 2012 the bonus limitations will apply to Mr. Mears and Mr. Sykes such that they may not be eligible to receive comparable or other bonuses in 2012.

Elements of Compensation

The challenge for management and the Compensation Committee is to motivate, retain, and reward key performers for working harder and smarter than ever in a very difficult banking environment. At the same time, we recognize that some of the tools we would use to accomplish these objectives were unavailable due to the TARP compensation restrictions. In 2011, management and the Compensation Committee, believing in the long-term validity of our compensation program, attempted to preserve the integrity of that program to the extent possible, while respecting the requirements and restrictions of TARP.

Consistent with 2010 compensation, economic conditions, and Company performance, in 2011 it was apparent that making most incentive payments to executive officers would not be appropriate. As a result, the compensation to our executive officers, including our Named Executive Officers, continued to be frozen, with bonus and stock compensation all but eliminated. In freezing our compensation, the Company specifically considered worsening economic conditions in the markets in which our borrowers operate and that the levels of loan delinquencies and defaults that we were experiencing were substantially higher than historical levels.

The executive officers did not play a role in the compensation process during 2011, except for the former Chief Executive Officer, John A. B. Davies, Jr., who presented information regarding the other executive officers to the Compensation Committee for their consideration. Mr. Davies was never present while the Compensation Committee deliberated on his compensation package.

Our compensation packages currently consist of the following elements:

Salary: We consider many factors in determining the salary component for each of the executive officers. Because one of our objectives is to attract and retain high quality personnel, we, historically, have conducted surveys of other financial institutions and reviewed data from a peer group within our region taking into account asset size and revenue base to ensure that we are comparing ourselves to similar organizations. In fiscal 2011, however, no such survey or peer review was conducted and no benchmarking was used in setting annual compensation.

Salary for each executive officer is determined based on his or her individual and group responsibilities and achievements during the preceding year and such determination includes judgments based on performance evaluations, regulatory examination results, efficiency in performance of duties, and demonstrated leadership skills. Normally, decisions to increase or decrease compensation materially from the prior period are influenced by the amount of new responsibilities taken on by the executive officers and their contributions to the profitability of the Company.

Employment Agreements:

Douglas J. Glenn. Mr. Glenn entered into a six-year employment contract in 2007. His annual salary in 2011 was $425,000. Mr. Glenn is eligible to participate in the following compensation programs offered by the Company: Supplemental Retirement Agreement, Stock Incentive Plan, and the Executive Savings Plan, which was terminated effective September 30, 2010. On February 13, 2012, in connection with his appointment to President and Chief Executive Officer, Mr. Glenn entered into an Amended and Restated Employment Agreement (“Restated Agreement”). The Restated Agreement provides that Mr. Glenn’s employment with the Company and the Bank is at-will and that he is entitled to 90 days prior notice of termination of his employment. Mr. Glenn will receive an initial base salary of $550,000 and will be eligible

for annual salary increases at the discretion of the boards of directors of the Company and the Bank. Under the Restated Agreement, Mr. Glenn is also entitled to participate in the Company’s employee and director benefit plans and programs for which he is or will be eligible and certain fringe benefits. Mr. Glenn will not be entitled to any change of control or severance benefits.

The Restated Agreement provides that Mr. Glenn will receive annual restricted stock grants equal to 50% of his average base salary in the year of the grant. The restricted stock will vest on the later of two years from the date of the grant, the date the Company is no longer subject to the executive compensation and corporate governance requirements of Section 111(b) of the EESA, or the date the Company is no longer subject to the Written Agreement. Any shares of restricted stock that vest shall not be transferable except as permitted by EESA and the regulations thereunder.

Mr. Glenn also has a supplemental employment retirement agreement. The purpose of the agreement is to provide a retirement vehicle for Mr. Glenn that will reward his years of service to the Company. Under this agreement, Mr. Glenn is eligible to receive an annual benefit payable in 15 installments equal to 50% of his benefit computation base following the attainment of his plan retirement date in 2031. The benefit computation base is calculated on his average compensation including bonuses from us over the three highest compensation completed calendar years prior to the year during which the plan retirement date occurs. Currently the estimated annual benefits payable upon retirement at the plan retirement date are $488,668. Mr. Glenn will become fully vested in the plan on November 2022. The Restated Agreement amended Mr. Glenn’s supplemental employment retirement agreement to state that the maximum aggregate amount he shall be entitled to receive is the lesser of $600 thousand or the amount he is otherwise entitled to under the supplemental retirement agreement.

Upon his hiring, Mr. Glenn was granted incentive stock options for 800 shares of Company Common Stock that vests in years five through ten of Mr. Glenn’s employment, or immediately upon a change-of-control event and other customary circumstances.

John A. B. Davies, Jr. Mr. Davies resigned as President and Chief Executive Officer of the Company on August 12, 2011. Mr. Davies joined the Company as President and Chief Executive Officer effective July 14, 2009, at which time the Company and Mr. Davies entered into a three-year employment contract, which provided for an initial annual salary of $500,000. He was eligible to participate in all cash and non-cash employee benefit plans maintained by the Company for its senior executive officers, as determined by the Board of Directors. All of the plans are more fully discussed herein. Other benefits extended to Mr. Davies included the personal use of a Company automobile.

Subject to certain limitations, Mr. Davies’ employment agreement provided that he was to receive annual restricted stock grants. Mr. Davies received no such restricted stock grants in 2011.

Mr. Davies’ employment agreement also called for certain payments to be made if he was terminated other than for “cause” or resigned for “good reason” (as those terms were defined in his employment agreement), or if he was terminated other than for cause or resigned for good reason within one year after a “change of control” (as that term is defined in his employment agreement).

The Company’s obligation to make these payments was qualified in its entirety by the Company’s ability to make such payments under applicable law. The Company made no such payments in connection with Mr. Davies’ resignation from the Company.

In connection with Mr. Davies’ resignation from the Company, he entered into a Consulting Agreement and a Transition Agreement, both dated August 17, 2011. The Consulting Agreement provided that, effective September 12, 2011, Mr. Davies was retained as a consultant for one year in order to facilitate a smooth and orderly transition within the Company and the Bank and to assure access to Mr. Davies’ unique and valuable services. Under the Consulting Agreement, Mr. Davies could have performed up to 1,000 hours of service, as specified in the Consulting Agreement, in exchange for monthly consulting payments of $41,667, subject to adjustment based on the number of hours of service performed in a particular month. In addition, the Company would reimburse Mr. Davies for out-of-pocket expenses he reasonably incurred to perform his consulting services, subject to the prior approval of the Company. Under the Transition Agreement, Mr. Davies continued to serve as a full-time employee until September 11, 2011, at which point his employment terminated. Also under the Transition Agreement, Mr. Davies agreed not to compete with the Company or the Bank or solicit any employee of the Company or the Bank until September 11, 2013 in exchange for $110,000 in cash consideration. The Transition Agreement also contains a mutual release of claims.

On August 20, 2012, Mr. Davies and the Company entered into a Settlement Agreement and Mutual Release, effective August 17, 2012 (the “Settlement Agreement”). The Settlement Agreement contains a mutual release and waiver of claims and resolves certain matters related to the Consulting Agreement and the Transition Agreement. In particular, it provides that the term of the Consulting Agreement is complete, that Mr. Davies is not entitled to any further payment for work completed or in process and that he will not perform any additional consulting services under the Agreements or otherwise. The Settlement Agreement also provides that the payment of $25,000 made by the Company to Mr. Davies on the execution of the Settlement Agreement constitutes the final payment to be made under the Transition Agreement in return for Mr. Davies’ agreement not to compete with or solicit for hire any employee of the Company or BHR until September 11, 2013.

Stephen P. Theobald. Mr. Theobald has no written employment contract with the Company. His annual base salary is $425,000. In addition, Mr. Theobald is eligible to participate in all of the plans and arrangements that are generally available to all of the Company’s salaried employees.

W. Thomas Mears. Mr. Mears has no written employment contract with the Company. His annual base salary is $240,000. Mr. Mears received a $100,000 sign-on bonus as well. In addition, Mr. Mears is eligible to participate in all of the plans and arrangements that are generally available to all of the Company’s salaried employees.

Michael J. Sykes. Mr. Sykes has no written employment contract with the Company. His annual base salary is $150,000. During 2011, Mr. Sykes also received commissions of $146,494 for his work in the Company’s special assets division. As a member of the special assets division, Mr. Sykes participated in the Special Assets Division 2011 Proposed Incentive Plan. Under this plan, Mr. Sykes was eligible for and received commissions on the resolution of non-performing assets equal to 0.75% of qualifying resolutions. Mr. Sykes is no longer a member of the special assets division, and therefore, no longer participates in this or similar plans though he may receive commission under the plan on non-performing assets that began the resolution process and were still in process before he left the division. In addition, Mr. Sykes is eligible to participate in all of the plans and arrangements that are generally available to all of the Company’s salaried employees.

Robert J. Bloxom. Mr. Bloxom previously entered into a five-year employment contract with Shore Bank in 2008, which includes payment of a severance amount in the event of a change-in-control of the Company, which may be paid unless the Treasury Department or other government agency issues guidance that would prohibit such payments, such as EESA and ARRA. If permitted by law, the severance amount will be equivalent to 2.99 times his annual salary payable over a sixty-month period. Mr. Bloxom’s annual salary in 2011 was $275,000. Mr. Bloxom’s employment contract will renew in five-year increments. In addition, Mr. Bloxom is eligible to participate in all of the plans and arrangements that are generally available to all of the Company’s salaried employees.

Incentive Arrangement: In order to focus our executive officers’ attention on the profitability of the organization as a whole, we have historically paid cash incentives based upon our annual financial performance as measured by return on average assets. Given the operating losses experienced in 2010, a decision was reached that the Company would not pay bonuses to executive officers under this plan during 2011.

2011 Omnibus Stock Incentive Plan: We strongly encourage our employees to own stock in the Company. We feel that stock ownership among employees fosters loyalty and longevity and is an excellent method for aligning employee interests with the long-term goals of the organization and our shareholders. To facilitate stock ownership, the compensation committee of the Board of Directors adopted the 2011 Omnibus Stock Incentive Plan, which was approved by our shareholders on October 4, 2011. Amendments increasing the number of shares available for grant and raising the grant size limitations under the 2011 Omnibus Stock Incentive Plan were approved by our shareholders on June 25, 2012. The 2011 Omnibus Incentive Plan succeeds our 2006 Stock Incentive Plan and provides for the grant of up to 13,675,000 shares of our Common Stock as awards to employees of the Company and its related entities, members of the Board of Directors of the Company, and members of the board of directors of any of the Company’s related entities. Awards may be made in the form of options, stock appreciation rights, stock awards, stock units, and incentive awards. Each type of award under the plan is subject to different requirements and the awards may be conditioned by the performance of the officers and their contribution to the performance of the Company. The plan provides that no person shall be granted stock options or stock appreciation rights for more than 7,750,000 shares of Common Stock or stock awards or stock units of more than 3,875,000 shares of Common Stock during any calendar year. The plan also provides that no person may be granted incentive awards in any

calendar year with a maximum possible payout of more than $1.5 million. During 2011, the Company granted no stock options, stock awards, or other incentive awards under this plan or under the 2006 Stock Incentive Plan it replaced.

Executive Savings Plan: We implemented an Executive Savings Plan with executive officers and certain other officers whereby an initial contribution of the officer’s salary made by the officer will be matched 100% each year by the Company as long as the officer’s employment with the Company continues and the officer is in good standing. This plan was terminated, effective September 30, 2010 and all remaining account balances were distributed on October 1, 2011.

Defined Contribution Plan: We provide defined contribution 401(k) plans at each of our subsidiary banks. The Company may also make an additional discretionary contribution to the plans. Participants are fully vested in their contributions and the Company’s match immediately and become fully vested in the Company’s discretionary contributions after three years of service.

Previously, Bank of Hampton Roads, Gateway, and Shore had separate plans, however, on April 1, 2011, the Company converted all plans into the Virginia Bankers Association Master Defined Contribution Plan for Hampton Roads Bankshares, Inc. (the “Plan”). Any employee of the Company, Bank of Hampton Roads, or Hampton Roads Investments, Inc. who is at least 21 years of age and has at least three months of service is eligible to participate in the Plan. Additionally, any employee of Shore Bank who is at least 18 years old and has at least three months of service prior to April 1, 2011 is eligible to participate in the Plan. Participants may contribute up to 98% of their covered compensation, subject to statutory limitations, and the Company will make matching contributions of 100% of the first 3% of pay and 50% for the next 2% of pay. The Company may also make additional discretionary contributions to the Plan. Participants are fully vested in their contributions and the Company’s match immediately and become fully vested in the Company’s discretionary contributions after three years of service.

Supplemental Retirement Agreement: The Company has entered into Supplemental Retirement Agreements with several key officers, including Mr. Glenn. The details of his agreements are discussed above.

Risk Assessment

We reviewed our compensation programs and policies for all employees and determined that they do not encourage employees to expose the Company to imprudent risks and are not reasonably likely to have a material adverse effect on the Company. We believe our compensation programs are designed with the appropriate balance of risk and reward in relation to our Company’s overall business strategy. In addition, our executive compensation programs did not provide for the payment of performance-based bonuses in 2011, which significantly reduces the amount of excessive risk-taking that our compensation programs might impose.

2011 Compensation Committee Report

The Compensation Committee has reviewed the Compensation Discussion and Analysis included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 and included in this proxy statement related to its 2012 Annual Meeting of Shareholders and discussed it with the Company’s management. Based on this review and discussion, the Compensation Committee recommended that the Compensation Discussion and Analysis be included in the Company’s annual report on Form 10-K for the year ended December 31, 2011 and the Company’s Proxy Statement.

During 2011, the Company participated in the TARP established by the Treasury under the EESA as a result of its prior sale of preferred stock to the Treasury and subsequent exchange and conversion of preferred stock into Common Stock of the Company.

As required by the TARP and by the ARRA, the Compensation Committee reviewed the terms of each senior executive officer and employee compensation plan with the Company’s senior risk officer. This process included the review of all applicable senior executive officer and employee contracts, including salary, annual incentives, and long-term incentives and performance measurements.

As required by ARRA, a number of changes were made to our executive compensation program. The changes include:

In addition, the Company has required that bonus payments to senior executive officers or any of the next twenty most highly compensated employees, as defined in the regulations and guidance established under section 111 of EESA (bonus payments), be subject to a recovery or “clawback” provision if the bonus payments were based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria.

The purpose of the review was to identify any features of the compensation plans that could encourage the Company’s executive officers to take unnecessary and excessive risks or encourage the Company’s employees to manipulate reported earnings to enhance compensation. The Committee believes that the compensation plans do not encourage the senior executive officers to take unnecessary or excessive risks that threaten the value of the Company or encourage the manipulation of reported earnings because such plans currently do not contain performance-based compensation elements. In addition, to ensure compliance with relevant laws associated with the receipt of TARP and to limit potential risks posed by its compensation plans, the Company suspended all incentives, with the exclusion of base salaries.

The Compensation Committee certifies that it has reviewed with the senior risk officer the senior executive officer compensation plans and has made all reasonable efforts to ensure that

these plans do not encourage senior executive officers to take unnecessary and excessive risks that threaten the value of the Company. The Compensation Committee further certifies that it has reviewed with the senior risk officer the employee compensation plans and has made all reasonable efforts to limit any unnecessary risks these plans pose to the Company; and the Company has reviewed the employee compensation plans to eliminate any features of these plans that would encourage the manipulation of reported earnings of the Company to enhance the compensation of any employee.

Patrick E. Corbin

Henry P. Custis, Jr.

Robert B. Goldstein

Hal F. Goltz

W. Lewis Witt

Summary Compensation Table

The following table shows the compensation of our principal executive officers and principal financial officers during 2011, as well as our three most highly compensated executive officers (other than our principal executive officer and principal financial officers) during the year. References throughout this proxy statement to our “Named Executive Officers” or “named executives” refer to each of the individuals named in the table below.

Outstanding Equity Awards at Fiscal Year-End Table

The following table presents outstanding stock option and non-vested stock awards as of December 31, 2011.

With the exception of the shares expiring on November 1, 2017, the above stock options are fully vested and have 10-year terms. The shares expiring on November 1, 2017 are vested over ten years so that 80 shares vest annually on November 1.

Option Exercises and Stock Vested Table

The following table presents the stock options exercised and the stock awards vested for the Named Executive Officers during 2011.

Pension Benefits Table

The following table presents information related to the Supplemental Retirement Agreements for the Named Executive Officers as of and for the year ended December 31, 2011.

Mr. Glenn’s Supplemental Retirement Agreements is discussed in further detail in the Compensation Discussion and Analysis section of this proxy statement. The discount rate used to calculate the Present Value of Accumulated Benefit was 7% under the terms of the plan agreement.

Nonqualified Deferred Compensation Table

The following table presents information related to the Executive Savings Plan for the Named Executive Officers during 2011.

The Executive Savings Plan was terminated on September 30, 2011 and the remaining balance was paid on October 1, 2011. The Executive Savings Plan is discussed in further detail in the Compensation Discussion and Analysis section of this proxy statement. The amounts disclosed above in the “Aggregate Earnings in Last Fiscal Year” columns were also included in the “All Other Compensation” column of the Summary Compensation Table above.

Potential Payments upon Termination or Change-in-Control

The table below shows the present value of estimated Company payments under the employment agreements, equity plans, and other non-qualified plans described above, upon a termination of employment, including the Company gross-up payments for excise tax on the parachute payments upon a change of control, for each of the Named Executive Officers. The payments represent the maximum possible payments under interpretations and assumptions most favorable to the executive officer. All termination events are assumed to occur on December 31, 2011 and termination upon a change of control is assumed to be involuntary by the Company or its successor. Company payments to a terminated executive may be more or less than the amounts contained in the various agreements and plans. In addition, certain amounts currently are vested and, thus, do not represent an increased amount of benefits. Mr. Davies resigned as President and Chief Executive Officer of the Company on August 12, 2011. In connection with that resignation, he entered into a Consulting Agreement and a Transition Agreement, both of which are discussed in more detail in the Compensation Discussion and Analysis section of this proxy statement. The amounts shown for Mr. Davies’ Consulting Agreement and Transition Agreement below are the amounts actually due under the agreements to Mr. Davies, subject to the conditions and obligations applicable to such payments discussed above under Compensation Discussion and Analysis.

Director Compensation Table

The following table shows compensation paid to directors of the Company during 2011.

During 2011, each director of the Company received a monthly director’s fee of $1,667 and $500 per committee meeting attended ($250 if attended by teleconference). Neither the Chairman of the Company’s Board nor any chairman of a board committee was otherwise compensated.

Certain of the Company’s directors also serve as directors of Shore Bank, a wholly-owned subsidiary of the Company. Each director of Shore Bank receives an annual retainer of $13,000 regardless of whether he attends meetings of the board plus $500 for each meeting attended, except for the chairman of the Shore Bank board, who receives an annual retainer of $22,000 plus $500 for each meeting attended. In addition, each director, excluding Mr. Glenn, is paid $250 for each board committee meeting attended. The Chair of the Investment, Asset/Liability Management and Compensation committees is paid $500 per meeting attended, and the Chair of the Audit Committee is compensated $700 per meeting, with other Audit Committee members receiving $350 per meeting attended.

In 2010, the Board of Directors adopted a director compensation program pursuant to which each director beginning in 2011 would receive an annual cash retainer of $20,000 and an annual grant of restricted stock units with a one-year vesting period and a value equal to the annual cash retainer. Due to the Company’s focus on other matters during 2011, the grant of restricted stock units was not distributed to eligible directors in 2011 or to date in 2012, however the Company expects that the restricted stock units for service in 2011 and 2012 will be distributed to current directors entitled to such restricted stock units in the near future.

Compensation Committee Interlocks and Insider Participation

No member of the Company’s Compensation Committee was an officer or employee of the Company during 2011. During 2011, none of our executive officers served as a member of a Compensation Committee of another entity, nor did any of our executive officers serve as a director of another entity whose executive officers served on our Compensation Committee. There are members of our Compensation Committee that have outstanding loans with Bank of Hampton Roads. Each of these loans was made in the ordinary course of business on substantially the same terms, including interest rates, collateral, and repayment terms, as those prevailing at the time for comparable transactions with unrelated parties and did not involve more than the normal risk of collectability or present other unfavorable features. See “Certain Relationships and Related Transactions.”

PROPOSAL FOUR:

RATIFICATION OF ACCOUNTANTS

General

The Audit Committee has recommended and the board of directors has ratified the selection of KPMG, LLP (“KPMG”) as the independent registered public accounting firm to audit our consolidated financial statements for the year ending December 31, 2012, and the board of directors desires that such appointment be ratified by our shareholders at the Annual Meeting. KPMG audited our consolidated financial statements for 2011 and 2010. Representatives of KPMG will be present at the Annual Meeting, will have an opportunity to make a statement if they desire to do so, and will be available to respond to appropriate questions.

A majority of the votes cast by holders of the Company’s Common Stock is required for the ratification of the appointment of the independent auditors.

Recent Change in Accountants

On October 7, 2010, the Company dismissed YHB as the Company’s independent registered public accounting firm and engaged KPMG as its new independent registered public accounting firm.

Except as noted in the paragraphs immediately below, YHB’s audit reports on the Company’s consolidated financial statements for the fiscal years ended December 31, 2009 and 2008 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.

The audit report of YHB on the Company’s consolidated financial statements, as of, and for the fiscal year ended December 31, 2009 (as restated), contained explanatory paragraphs noting that such financial statements had been restated due to a misstatement and that substantial doubt existed about the Company’s ability to continue to operate as a going concern.

The audit report of YHB on the effectiveness of the Company’s internal controls over financial reporting as of December 31, 2009, expressed an opinion that the Company had not maintained effective internal controls over financial reporting, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, because of the effect of a material weakness that culminated from multiple significant deficiencies identified in the Company’s internal controls over financial reporting (the “Material Weakness”). The areas in which these deficiencies existed are summarized as follows:

During the Company’s fiscal years ended December 31, 2009 and 2008 and through the current date, the Company is not aware of any disagreements with YHB on any matter of accounting principle or practice, financial statement disclosure, or auditing scope or procedure which, if not resolved to YHB’s satisfaction, would have caused it to make reference to the matter in conjunction with its report on the Company’s consolidated financial statements for the relevant year.

During the Company’s fiscal years ended December 31, 2009 and 2008 and through the current date there were no reportable events (within the meaning of Item 304(a)(1)(v) of Regulation S-K).

On October 7, 2010, following a comprehensive search process initiated by the Company, the Audit Committee of the Board of Directors of the Company appointed KPMG as the Company’s independent registered public accounting firm. The change in auditors was recommended by the Audit Committee.

During the Company’s fiscal years ended December 31, 2009 and 2008 and through the current date, neither the Company, nor anyone on behalf of the Company, consulted with KPMG with respect to either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s consolidated financial statements, and no written report or oral advice was provided by KPMG to the Company that KPMG concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing, or a financial reporting issue or (ii) any matter that was the subject of either a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K) or a reportable event (within the meaning of Item 304(a)(1)(v) of Regulation S-K).

Fees of Independent Public Accountants

Amounts paid to KPMG, LLP (“KPMG”) and Yount Hyde & Barbour, P.C. (“YHB”) for work performed in 2011 and 2010 appear below: