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Gateway bank to be sold: Hampton Roads Bankshares to buy victim of upheaval(Richmond Times-Dispatch (VA) Via Acquire Media NewsEdge) Sep. 25--Hampton Roads Bankshares Inc. will buy Gateway Financial Holdings Inc., a Virginia Beach-based bank that purchased Bank of Richmond several years ago and got into trouble this year after investing $40 million in Freddie Mac and Fannie Mae. "Gateway is the first local entity that has succumbed because of Freddie Mac and Fannie Mae," said Kent Engelke, chief economic strategist for Capitol Securities Management. The ailing mortgage giants were recently taken over by the government. Gateway Financial's investment in the two mortgage giants is now worth about $1.6 million, Engelke said. What makes the deal so unusual is that Gateway Financial is much larger than Hampton Roads Bankshares, "It's David swallowing Goliath," Engelke said. Gateway Financial is the holding company for Gateway Bank & Trust Co. Hampton Roads Bankshares oversees Bank of Hampton Roads. Gateway Financial had total assets of $2.1 billion as of June 30 with 37 branch locations, including six in the Richmond area; Hampton Roads had assets of $845 million with 18 offices in the Hampton Roads region and eight Shore Bank locations on the Eastern Shore of Virginia and Maryland. Together, they will have $3 billion in assets with headquarters in Norfolk. The deal, which is valued at $101 million, is expected to close in the fourth quarter, pending regulatory and shareholder approvals. It also is contingent upon Gateway Financial raising $30 million in capital. Its lack of sufficient capital was behind the sale, analysts say. Hampton Roads Bankshares will acquire all the outstanding shares of Gateway Financial. Gateway Financial shareholders will receive 0.67 shares of Hampton Roads Bankshares stock for each share they own. Typically, in a bank merger, the acquired talent is dismissed. But in this case, they will stay. Gateway Chairman and Chief Executive Officer D. Ben Berry will be the president of the holding company and he will serve on the board. Seven Gateway directors will be on the Hampton Road board of directors. Top talent will be utilized and that will be good for the bank, Engelke said. Jack W. Gibson, vice chairman, president and CEO of Hampton Roads Bankshares, said the combination was a "remarkable opportunity." He will remain as vice chairman and chief executive of the holding company and president and chief executive of the Bank of Hampton Roads subsidiary. "Gateway Bank & Trust . . . is a well-respected bank franchise that has grown tremendously over the past 10 years," Gibson said. Contact Carol Hazard at (804) 775-8023 or [email protected]. To see more of the Richmond Times-Dispatch, or to subscribe to the newspaper, go to http://www.timesdispatch.com. Copyright (c) 2008, Richmond Times-Dispatch, Va. Distributed by McClatchy-Tribune Information Services. For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. |