U.S. has vested stake in HR Bankshares

Tucked at the bottom of Hampton Roads Bankshares' news release last week about the closing of its $235 million private placement is a two-sentence reference to preferred shares owned by the U.S. Treasury Department.

The Treasury injected $80.3 million of capital into the bank holding company at the end of 2008 as it purchased Gateway Financial Holdings in the midst of the financial crisis. The money came from the bank bailout known as the Troubled Asset Relief Program.

But Hampton Roads Bankshares' troubled assets continued to pile up as real estate swooned, and it ended up needing even more capital, which it has now secured.

So how did the Treasury do on its investment? Not very good so far, but there's an upside.

As part of the transaction announced last week, Treasury converted its preferred shares into 52.2 million common shares and warrants to purchase up to 1.3 million more common shares at 40 cents each.

At Friday's close of 93 cents, the Treasury's stake was worth about $48.5 million, a $31.8 million loss on its 21-month-old investment.

However, should Hampton Roads Bankshares and its stock recover, taxpayers could make out. At $2 a share, the Treasury's stake would be worth $104.4 million. At $5 each, it would be $261 million.