TowneBank To Acquire Paragon

4/27/17

SUFFOLK, Va. and RALEIGH, N.C., April 27, 2017 (GLOBE NEWSWIRE) -- Hampton Roads based TowneBank (NASDAQ:TOWN) and Raleigh based Paragon Commercial Corporation, the parent company of Paragon Commercial Bank (NASDAQ:PBNC), today announced the signing of a definitive merger agreement pursuant to which TowneBank will acquire Paragon creating a $9.7 billion community bank. The acquisition of Paragon will expand Towne’s community banking franchise into two of the fastest growing metropolitan areas in the United States, Charlotte and Raleigh, North Carolina adding to Towne’s current presence in the Norfolk-Virginia Beach Virginia MSA, the Richmond Virginia MSA and Northeastern North Carolina.

Based on financial data as of March 31, 2017, the combined company would have total assets of $9.7 billion, total loans of $7.1 billion and total deposits of $7.5 billion. On a pro forma basis, TowneBank will possess the second largest deposit market share among community banks operating in the demographically attractive Raleigh, North Carolina MSA. In addition, the pro forma entity will have an established and scalable loan and deposit platform in the Charlotte, North Carolina marketplace.

Under the terms of the merger agreement, common shareholders of Paragon will receive a fixed exchange ratio of 1.7250 shares of TowneBank common stock for each outstanding share of Paragon common stock. This implies a deal value per share of $59.25 or approximately $323.7 million based on TowneBank’s closing stock price of $34.35 on April 26, 2017. Pending customary regulatory and shareholder approvals, the merger is scheduled to close in the fourth quarter of 2017.

Towne plans to operate in the Raleigh, Charlotte, and Cary markets as Paragon Bank, a division of TowneBank. Robert C. Hatley, President and CEO of Paragon, will continue in his current role as the President and CEO of the Paragon Division as well as the President of Towne’s North Carolina operations. Hatley and Paragon Board Chairman, Howard Jung, will join the TowneBank corporate board.

The Paragon Executive Management team consisting of Matthew C. Davis, Executive Vice President and Chief Operating Officer, James F. Fielding, Senior Vice President and Chief Credit Officer, Brian K. Reid, Triangle Market President and Phillip R. Jurney, Charlotte Market President, will continue in their current Paragon roles.

“We are really excited to welcome the extraordinarily talented Paragon team into our Towne family,” said G. Robert Aston, Jr., Chairman and CEO of TowneBank. “From our humble beginnings in 1999, both Towne and Paragon have prospered through a caring culture of serving others and enriching lives while continuing to build a great community asset for the communities we serve.”

“We have had great admiration for the TowneBank team for many years and have been impressed by the way they’ve grown their franchise into one of the top community banks in Virginia and North Carolina,” stated Robert C. Hatley, President and CEO of Paragon. “We believe partnering with TowneBank will provide us with a strong foundation and additional capacity to deliver our unique private banking experience business model to businesses, professionals, executives and entrepreneurs in our target markets. We expect this merger will be a truly great outcome for our shareholders and will position us for continued success."

Extensive due diligence was performed over a multi-week period leading up to the merger. Under the proposed merger terms, and inclusive of estimated expenses associated with crossing $10 billion in total assets, the acquisition of Paragon is expected to be immediately accretive to TowneBank’s earnings in 2018 and also thereafter. In addition, the transaction is expected to be nominally dilutive, less than 1%, to TowneBank’s tangible book value at closing. TowneBank’s capital ratios are expected to continue to exceed well-capitalized regulatory standards.

An investor presentation outlining the transaction is provided on the TowneBank website at www.townebank.com under “Investor Relations”.

Sandler O’Neill + Partners, LP acted as financial advisor to TowneBank and Williams Mullen acted as its legal advisor in the transaction. Raymond James & Associates, Inc. acted as financial advisor to Paragon and Wyrick Robbins Yates & Ponton LLP acted as its legal advisor.

About TowneBank

As one of the top community banks in Virginia and North Carolina, TowneBank operates 37 banking offices serving Chesapeake, Chesterfield County, Glen Allen, Hampton, James City County, Mechanicsville, Newport News, Norfolk, Portsmouth, Richmond, Suffolk, Virginia Beach, Williamsburg, and York County in Virginia, along with Moyock, Grandy, Camden County, Southern Shores, Corolla and Nags Head in North Carolina. Towne also offers a full range of financial services through its controlled divisions and subsidiaries that include Towne Investment Group, Towne Insurance Agency, Towne Benefits, TowneBank Mortgage, TowneBank Commercial Mortgage, Berkshire Hathaway HomeServices Towne Realty, Towne 1031 Exchange, LLC, and Beach Properties of Hilton Head. Local decision-making is a hallmark of its hometown banking strategy that is delivered through the leadership of each group’s President and Board of Directors. With total assets of $8.2 billion as of March 31, 2017, TowneBank is one of the largest banks headquartered in Virginia.

About Paragon

Paragon Commercial Corporation is the parent company of Paragon Bank, which provides a private banking experience to businesses, professionals, executives, entrepreneurs and other individuals. Founded in Raleigh, North Carolina in 1999, Paragon Bank provides banking services through highly responsive professionals, an extensive courier service, online and mobile technologies, free worldwide ATM access and a select number of strategically placed offices in Raleigh, Cary and Charlotte, North Carolina.

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