I NVESTOR P RESENTATION T HIRD Q UARTER 2016 Forward-Looking - - PowerPoint PPT Presentation

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I NVESTOR P RESENTATION T HIRD Q UARTER 2016 Forward-Looking Statement Statements made in this presentation, other than those concerning historical financial information, may be considered forward-looking statements, which speak only as of

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INVESTOR PRESENTATION – THIRD QUARTER 2016

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Forward-Looking Statement

Statements made in this presentation, other than those concerning historical financial information, may be considered forward-looking statements, which speak only as of the date of this presentation and are based on current expectations and involve a number of assumptions. TowneBank intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of these safe harbor provisions. TowneBank’s ability to predict results, or the actual effect of future plans or strategies, is inherently uncertain. Factors which could have a material effect on the operations and future prospects

f TowneBank include but are not limited to: the businesses of TowneBank and the recently-acquired Monarch Financial

Holdings, Inc. may not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected, and expected revenue synergies and cost savings from the acquisition may not be fully realized or realized within the expected timeframe; changes in interest rates, general economic and business conditions; legislative/regulatory changes; the monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve; the quality and composition of the loan and securities portfolios; demand for loan products; deposit flows; competition; demand for financial services in TowneBank’s market areas; the implementation of new technologies; the ability to develop and maintain secure and reliable electronic systems; changes in the securities markets; changes in accounting standards, principles, policies and guidelines; mergers, acquisitions and dispositions; and other risk factors detailed from time to time in filings made by TowneBank with the Federal Deposit Insurance Corporation. TowneBank undertakes no

bligation to update or clarify these forward-looking statements, whether as a result of new information, future events or
therwise.

Non-GAAP Financial Measures

This slide presentation contains certain non-GAAP financial measures determined by methods other than in accordance with generally accepted accounting principles. Such non-GAAP financial measures include the following: fully tax-equivalent net interest margin, tangible book value per common share, total risk-based capital ratio, tier one leverage ratio, tier one capital ratio, and the tangible common equity to tangible assets ratio. Management uses these non-GAAP financial measures to assess the performance of TowneBank’s core business and the strength of its capital position. Management believes that these non-GAAP financial measures provide meaningful additional information about TowneBank to assist investors in evaluating operating results, financial strength, and capitalization. The non-GAAP financial measures should be considered as additional views of the way our financial measures are affected by significant charges for credit costs and other factors. These non-GAAP financial measures should not be considered as a substitute for operating results determined in accordance with GAAP and may not be comparable to other similarly titled measures of other companies. The computations of the non- GAAP financial measures used in this presentation are referenced in a footnote or in the appendix to this presentation.

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Sincerely,

G. Robert Aston, Jr.

Chairman and Chief Executive Officer The Towne story began in my home garage in the summer of 1998 when a small group of long-time friends and banking associates came together to lay the foundation for what was to become

TowneBank. With caring as a specific business strategy and a deep-rooted passion for service to others,
ur defined culture for Towne set us on a course to begin building a great community asset for our

hometown community in the Hampton Roads Region of Virginia and expanded to Richmond, VA MSA. Our initial stock offering was substantially oversubscribed as over 4,000 community shareholders invested over $50 million in what was the largest capitalization of a new bank in Virginia history. In another first, we actually returned $13 million to our subscribers and limited any one shareholder to a maximum investment of $250,000. This extraordinary level of capital coupled with the reputation our bankers enjoyed with the banking regulators allowed the bank to open with 90 hometown bankers and three banking centers located in the cities of Virginia Beach, Chesapeake and Portsmouth. More than a bank, Towne has emerged as a family of companies providing wealth management, insurance, real estate brokerage, residential and vacation property management along with commercial and residential mortgage services. As a tribute to our early investors and community supporters, Towne now has assets approaching $8 billion, an enviable record of 16 consecutive years of increased earnings, and has returned over $145 million in common dividends since our opening on April 8, 1999. As you review the information contained in this Investor Presentation, please know that we welcome you to join our TowneBank family of investors and supporters as we embark on a new and continued journey as a growth company.

Welcome to TowneBank (TOWN)

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$203 $385 $560 $764 $932 $1,448 $1,803 $2,195 $2,501 $3,134 $3,606 $3,871 $4,082 $4,406 $4,673 $4,982 $6,297 $7,830

$- $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 42643

Total Assets

(Dollars in millions)

12% compounded annual growth rate during credit cycle (‘07-’12)

4 9/30/2016

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$61.6

$(10.0) $- $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD 2016

Net Income

28% compounded annual growth rate for the past 16 years

(Dollars in millions) 1) 2016 Core Earnings of $61.6 million, GAAP Earnings of $48.3 million

$48.3 $13.3

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1 TowneBank (VA) 27 5,133 21.51 190.11 2 Wells Fargo & Co 54 4,713 19.75 87.28 3 SunTrust Banks Inc. (GA) 39 3,887 16.29 99.67 4 BB&T Corp. (NC) 49 3,120 13.07 63.67 5 Bank of America Corp. (NC) 37 2,855 11.96 77.16 6 Old Point Financial Corp. (VA) 21 729 3.06 34.71 7 Hampton Roads Bankshares Inc. (VA) 18 677 2.84 37.61 8 Southern BancShares (NC) 11 459 1.92 41.73 9 PNC Financial Services Group (PA) 11 390 1.63 35.45 10 Chesapeake Bank (VA) 8 331 1.39 41.38 Total For Institutions In Market 334 23,865

Strong Market Position

1)Data as of 6/30/2016 FDIC Summary of Deposits for the Virginia Beach – Norfolk – Newport News, VA – NC MSA

Average Branch Size ($mm) Market Share (%) Deposits in Market ($mm) Number of Branches Institution (ST)

Virginia Beach-Norfolk-Newport News, VA-NC ¹

Rank

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Bank 1999 2005 2010 2016 Towne neBank nk 1.9 8.9 14.4 21.5 Wells Fargo 28.7 22.7 20.3 19.8 SunTrust 15.6 14.0 15.6 16.3 BB&T 22.1 14.5 12.2 13.1 Bank of America 15.6 15.2 10.2 12.0 Total 83.9 75.3 72.7 82.7

Hampton Roads Market Share Overview

1) Data as of 6/30/2016 FDIC Summary of Deposits for the Virginia Beach – Norfolk – Newport News, VA – NC MSA

Bank 2016 1999 2010 2005

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#1 Market Share by City/County

1) Data as of 6/30/2016 FDIC Summary of Deposits

Rank

Rank Institution (ST) 1 TowneBank (VA) 6 1,546 25.62 257.67 2 Wells Fargo & Co 16 1,371 22.73 85.69 3 BB&T Corp. (NC) 14 874 14.49 62.43 4 Bank of America Corp. (NC) 9 870 14.42 96.67 5 SunTrust Banks Inc. (GA) 10 386 6.40 38.60 6 Xenith Bankshares Inc. (VA) 6 293 4.86 48.83 7 PNC Financial Services Group (PA) 6 259 4.29 43.17 8 Southern BancShares (NC) 4 169 2.80 42.25 9 Fulton Financial Corp. (PA) 3 120 1.99 40.00 10 Dollar Bank FSB (PA) 2 46 0.77 23.00 Total For Institutions In Market 82 6,034 Rank Institution (ST) 1 TowneBank (VA) 2 812 30.01 406.00 2 Wells Fargo & Co 8 507 18.74 63.38 3 BB&T Corp. (NC) 5 480 17.73 96.00 4 Bank of America Corp. (NC) 4 323 11.94 80.75 5 Xenith Bankshares Inc. (VA) 6 222 8.20 37.00 6 SunTrust Banks Inc. (GA) 3 167 6.16 55.67 7 Southern BancShares (NC) 3 64 2.37 21.33 8 Fulton Financial Corp. (PA) 2 48 1.78 24.00 9 PNC Financial Services Group (PA) 1 44 1.62 44.00 10 Old Point Financial Corp. (VA) 2 20 0.73 10.00 Total For Institutions In Market 40 2,706 Rank Institution (ST) 1 TowneBank (VA) 3 637 59.11 212.33 2 Wells Fargo & Co 5 223 20.66 44.60 3 BB&T Corp. (NC) 3 167 15.50 55.67 4 SunTrust Banks Inc. (GA) 1 26 2.39 26.00 5 Bank of America Corp. (NC) 1 24 2.23 24.00 6 Woodforest Financial Grp Inc. (TX) 1 1 0.10 1.00 Total For Institutions In Market 14 1,077 Rank Institution (ST) 1 TowneBank (VA) 3 164 88.72 54.67 2 Bank of Hampton Roads (VA) 1 21 11.28 21.00 Total For Institutions In Market 4 185 Virginia Beach, VA Chesapeake, VA Portsmouth, VA Number of Branches Deposits in Market ($mm) Market Share (%) Average Branch Size ($mm) Number of Branches Deposits in Market ($mm) Market Share (%) Average Branch Size ($mm) Number of Branches Deposits in Market ($mm) Market Share (%) Average Branch Size ($mm) Currituck County, NC Number of Branches Deposits in Market ($mm) Market Share (%) Average Branch Size ($mm) Rank Institution (ST) 1 TowneBank (VA) 3 534 29.88 178.00 2 Bank of America Corp. (NC) 5 275 15.37 55.00 3 Wells Fargo & Co 4 266 14.89 66.50 4 SunTrust Banks Inc. (GA) 5 203 11.38 40.60 5 BB&T Corp. (NC) 3 144 8.07 48.00 6 Old Point Financial Corp. (VA) 4 136 7.64 34.00 7 Union Bkshs Corp (VA) 2 84 4.69 42.00 8 Eastern Virginia Bankshares (VA) 1 50 2.77 50.00 9 PNC Financial Services Group (PA) 1 36 2.00 36.00 10 Fulton Financial Corp. (PA) 1 30 1.70 30.00 Total For Institutions In Market 31 1,787 Rank Institution (ST) 1 TowneBank (VA) 2 312 28.78 156.00 2 PNC Financial Services Group (PA) 5 204 18.77 40.80 3 Wells Fargo & Co 3 153 14.06 51.00 4 Yadkin Bank (NC) 5 126 11.63 25.20 5 BB&T Corp. (NC) 3 95 8.77 31.67 6 Southern BancShares (NC) 3 79 7.33 26.33 7 Bank of Hampton Roads (VA) 1 54 4.99 54.00 8 First South Bank (NC) 2 40 3.73 20.00 9 First Bank (NC) 1 21 19.50 21.00 Total For Institutions In Market 25 1,085 Rank Institution (ST) 1 TowneBank (VA) 1 246 19.24 246.00 2 SunTrust Banks Inc. (GA) 3 222 17.30 74.00 3 Wells Fargo & Co 1 213 16.64 213.00 4 Bank of America Corp. (NC) 2 199 15.54 99.50 5 Citizens and Farmers Bank (VA) 2 109 8.54 54.50 6 Chesapeeake Bank (VA) 4 68 5.31 17.00 7 Old Point Financial Corp. (VA) 2 63 4.89 34.00 8 BB&T Corp. (NC) 2 59 4.57 29.50 9 The Middleburg Bank (VA) 1 49 3.85 49.00 10 Union Bank & Trust (VA) 1 33 2.59 33.00 11 PNC Financial Services Group (PA) 1 19 1.52 19.00 Total For Institutions In Market 20 1,281 Dare County, NC Newport News, VA Number of Branches Deposits in Market ($mm) Market Share (%) Average Branch Size ($mm) James City County, VA Number of Branches Number of Branches Deposits in Market ($mm) Market Share (%) Average Branch Size ($mm) Deposits in Market ($mm) Market Share (%) Average Branch Size ($mm)

Virginia Beach, VA