Gateway Financial Holdings Inc. in Virginia Beach said it raised $37.55 million of capital this week, fulfilling a requirement of its deal to sell itself to Hampton Roads Bankshares Inc. of Norfolk, Va.
The $2.1 billion-asset parent of Gateway Bank and Trust Co. said it completed the sale of preferred stock late Monday.
Gateway Financial's capital was depleted because it had to write down most of its $40.4 million of investments in Fannie Mae and Freddie Mac preferred stock after both government-sponsored enterprises were put in conservatorship.
The $845 million-asset Hampton Roads is buying Gateway for about $101 million. One of the conditions of the deal, which was signed last week and is set to close this quarter, called for Gateway to raise between $20 million and $35 million to regain well-capitalized status.
Gateway's shares rose 3.3% Wednesday, to $5.53.