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TowneBank Reports Record Earnings for 2013

TowneBank Reports Record Earnings for 2013

Earnings per Share up 12%

SUFFOLK, Va., Feb. 4, 2014 (GLOBE NEWSWIRE) -- Hampton Roads based TowneBank
(the "Bank") (Nasdaq:TOWN) reported record earnings of $41.76 million for the
year ended December 31, 2013, a 10.10%, or $3.83 million, increase over the
$37.93 million reported for 2012. Net income available to common shareholders
for 2013 increased 18.39% after preferred dividend payments of $4.23 million.
Fully diluted earnings per share reached the highest level in the Bank's
15-year history ending the year at $1.16 per share, an increase of 12.62% over
2012.

The Bank's common dividend totaled $0.38 per share for 2013, an increase of
15.15% over the dividend declared per share during 2012. The quarterly
dividend was increased to $0.10 per share beginning in the third quarter of
2013, which represents an annualized dividend rate of $0.40 per share.

2013 Financial Highlights

Reflecting an industry-wide trend, net interest income for 2013 was
essentially flat with 2012 due primarily to the extended period of
historically low interest rates driven by the Federal Reserve's monetary
policy. In spite of the Bank's loan portfolio increasing 3.27% to end the
period at $3.24 billion, net interest income declined 0.27% to $143.90
million. "In simple terms, the monies received by the Bank from the repayment
of existing loans is being reinvested in new loans carrying a lower rate of
return than the loans being repaid," said G. Robert Aston, Jr., Chairman and
Chief Executive Officer.

Noninterest income, excluding gains on investment securities, increased a
robust $8.73 million, an increase of 10.76%, to $89.92 million. These results
are largely due to the strategic decision made over a decade ago to diversify
the Company's earnings by investing in the real estate, mortgage, investment,
and insurance businesses the Bank owns today. During 2013, we continued to
make additional investments in insurance agencies, vacation travel insurance
operations, and the expansion of our mortgage production activities in
numerous new markets.

Good credit quality also contributed to the financial results for 2013 as the
Bank's nonperforming loans decreased 68.66% from $40.69million at the 2012
year-end to $12.75million at December31, 2013.Loan losses also declined
from $15.47million last year to $6.30million in 2013.Accordingly, the
Bank's loan loss provision declined $11.91 million in 2013.Total
nonperforming assets, including foreclosed property, declined to 1.12% of
total assets at December 31, 2013 as compared to 1.61% in 2012.

(in thousands)             12/31/2013 9/30/2013 6/30/2013 3/31/2013 12/31/2012
                                                               
Nonperforming loans        $12,753  $13,683 $11,746 $17,389 $40,691
                                                               
Foreclosed property        39,534     41,914    47,596    46,622    30,297
                                                               
Total nonperforming assets $52,287  $55,597 $59,342 $64,011 $70,988
                                                               
Quarterly net loans        $732     $804    $1,410  $3,349  $1,868
charged off
                                                               
Year-to-date net loans     $6,295   $5,563  $4,759  $3,349  $15,468
charged off

Noninterest expense increased 6.33% to $168.79million for the 2013 calendar
year.A significant portion of the increase was related to insurance
acquisitions, the mortgage company expansion, and the Bank's additional
investment in enhanced data processing capabilities, including a new backup
data center located in Sandston, Virginia.

Balance Sheet

At December 31, 2013, total Bank assets reached $4.67 billion, an increase of
$267.07 million, or 6.06%, over 2012.The Bank's loan portfolio ended the
period at $3.24 billion representing an increase of 3.27%, or $102.48million,
from the prior year, while earning assets increased to $4.30billion, a 6.51%,
or $262.67 million, increase over the same period.

The Bank continued to experience deposit growth with total deposits increasing
5.53% to $3.57billion.Noninterest bearing demand deposits slightly outpaced
overall deposit growth, ending the year at $1.04 billion, a 5.95%
increase.Noninterest deposits represented 29.07% of total deposits at
year-end 2013.

Capital Strength

The Bank's total equity at December 31, 2013 climbed to $585.32
million.Common equity increased 19.41%, or $81.24 million, as the Bank's
8%Series A Preferred Stock mandatorily converted on September1, 2013 into
3.19million shares of TowneBank common stock reflecting a conversion price of
$18.02 per share of common stock.Total risk-based capital remained strong as
total risk-based capital, Tier 1 capital, Tier 1 leverage ratios, and Tier 1
common capital ratios were 14.00%, 12.93%, 10.29%, 10.57%, respectively.All
ratios exceed the current regulatory standards for well capitalized status.

Fourth Quarter Results

Fourth quarter earnings were $9.67 million, an increase of 0.60% over the
fourth quarter of 2012.Net income available to common shareholders increased
14.78%, from $8.26million in 2012 to $9.48million in 2013.Fully diluted
earnings per share remained unchanged at $0.27 per share due largely to the
issuance of 3.19 million additional shares issued in conjunction with the
conversion of preferred stock into common during the third quarter of 2013.

Similar to the full year results, net interest income remained essentially
flat with the comparative period of 2012, decreasing slightly by 0.42%, or
$155,000, ending the quarter at $36.46million.

Noninterest income, excluding gains on investment securities, declined 1.50%,
or $284,000, reflecting a reduction in mortgage loan production from
$342.84million in the fourth quarter of 2012 to $273.68million in 2013.

Noninterest expense for the fourth quarter increased 1.62%, or $654,000,
including a reversal of $1.20million in previously accrued employee incentive
compensation unearned for the full 2013 year.

Loan growth during the quarter, including industrial revenue bond financing,
increased 2.2%, or$69.02million, on a linked quarter basis as the pace of
loan activity quickened compared to the prior periods of 2013.

"We are pleased to report another year of record earnings for 2013," stated
Aston."Our local economy shows some positive signs as the business community
appears to be regaining confidence about the future.TowneBank is well
positioned to assist and participate in the region's continued economic
recovery."

As one of the top community banks in Virginia and North Carolina, TowneBank
operates 27 banking offices serving Chesapeake, Hampton, Newport News,
Norfolk, Portsmouth, Suffolk, Virginia Beach, Williamsburg, James City County
and York County in Virginia along with Moyock, Grandy, Camden, Southern
Shores, Corolla and Kill Devil Hills 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, TFA
Benefits, TowneBank Mortgage, TowneBank Commercial Mortgage, Prudential Towne
Realty, Towne 1031 Exchange, LLC, and Corolla Classic Vacations.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 $4.67billion as of December 31, 2013,
TowneBank is one of the largest banks headquartered in Virginia.

Forward-Looking Statements:

This release contains forward-looking statements as defined by the Private
Securities Litigation Reform Act of 1995.These statements may address issues
that involve significant risks, uncertainties, estimates and assumptions made
by management.Factors that may cause actual results to differ materially from
those contemplated by such forward-looking statements include competitive
pressures in the banking industry that may increase significantly; changes in
the interest rate environment may reduce margins and/or the volumes and values
of loans made or held as well as the value of other financial assets held;
general economic conditions, either nationally or regionally, may be less
favorable than expected, resulting in, among other things, a deterioration in
credit quality and/or a reduced demand for credit or other services; changes
in the legislative or regulatory environment, including changes in accounting
standards, may adversely affect our business; costs or difficulties related to
the integration of the business and the businesses we have acquired may be
greater than expected; expected cost savings associated with pending or
recently completed acquisitions may not be fully realized or realized within
the expected time frame; our competitors may have greater financial resources
and develop products that enable them to compete more successfully; changes in
business conditions, changes in the securities market and changes in our local
economy with regards to our market area and its heavy concentration of U. S.
military bases and related personnel.We assume no obligation to update
information contained in this release.

                                                               
Selected Financial Highlights (unaudited)
TOWNEBANK
December31, 2013
(dollars in thousands)

                                                     Increase/  % Increase/
Three Months Ended December   2013         2012         (Decrease) (Decrease)
31,
                                                               
Results of Operations:                                          
Net interest income           $36,456    $36,611    $ (155)    (0.42)%
Noninterest income (1)        18,711       18,995       (284)      (1.50)%
Gain (loss) on investment     66           (33)         99         (300.00)%
securities
Noninterest expenses          41,000       40,346       654        1.62%
Provision for loan losses     551          2,959        (2,408)    (81.38)%
Income before income tax and  13,682       12,268       1,414      11.53%
noncontrolling interest
Provision for income tax      3,655        2,446        1,209      49.43%
expense
Net income                    10,027       9,822        205        2.09%
Net income attributable to    (353)        (206)        (147)      71.36%
noncontrolling interest
Net income attributable to    9,674        9,616        58         0.60%
TowneBank
Preferred stock dividends and 191          1,354        (1,163)    (85.89)%
accretion
Net income available to       9,483        8,262        1,221      14.78%
common shareholders
Net income per common share - 0.28         0.27         0.01       3.70%
basic
Net income per common share - 0.27         0.27         —          —%
diluted
Period End Data:                                                
Total assets                  $4,672,997 $4,405,923 $267,074 6.06%
Total assets - tangible       4,552,935    4,286,921    266,014    6.21%
Earning assets (2)            4,296,486    4,033,813    262,673    6.51%
Loans (net of unearned        3,235,989    3,133,507    102,482    3.27%
income)
Allowance for loan losses     38,380       40,427       (2,047)    (5.06)%
Goodwill and other            120,061      119,002      1,059      0.89%
intangibles
Nonperforming assets          52,287       70,988       (18,701)   (26.34)%
Noninterest bearing deposits  1,037,028    978,818      58,210     5.95%
Interest bearing deposits     2,530,076    2,401,235    128,841    5.37%
Total deposits                3,567,104    3,380,052    187,052    5.53%
Total equity                  585,318      559,880      25,438     4.54%
Total equity - tangible       465,257      440,877      24,380     5.53%
Common equity                 499,850      418,606      81,244     19.41%
Common equity - tangible      379,789      299,604      80,185     26.76%
Book value per common share   14.39        13.30        1.09       8.20%
Book value per common share - 10.93        9.52         1.41       14.81%
tangible
Daily Average Balances:                                         
Total assets                  $4,660,930 $4,362,506 $298,424 6.84%
Total assets - tangible       4,540,448    4,249,404    291,044    6.85%
Earning assets (2)            4,277,000    3,976,463    300,537    7.56%
Loans (net of unearned
income), excluding nonaccrual 3,211,658    3,020,532    191,126    6.33%
loans
Allowance for loan losses     38,772       39,649       (877)      (2.21)%
Goodwill and other            120,482      113,103      7,379      6.52%
intangibles
Noninterest bearing deposits  1,058,660    966,934      91,726     9.49%
Interest bearing deposits     2,502,260    2,378,328    123,932    5.21%
Total deposits                3,560,920    3,345,262    215,658    6.45%
Total equity                  583,932      558,265      25,667     4.60%
Total equity - tangible       463,450      445,163      18,287     4.11%
Common equity                 499,106      417,051      82,055     19.68%
Common equity - tangible      378,624      303,949      74,675     24.57%
Key Ratios:                                                     
Return on average assets      0.82%        0.88%        (0.06)%    (6.82)%
Return on average assets -    0.85%        0.90%        (0.05)%    (5.56)%
tangible
Return on average equity      6.57%        6.85%        (0.28)%    (4.09)%
Return on average equity -    8.28%        8.59%        (0.31)%    (3.61)%
tangible
Return on average common      7.54%        7.88%        (0.34)%    (4.31)%
equity
Return on average common      9.94%        10.81%       (0.87)%    (8.05)%
equity - tangible
Net interest margin-fully tax 3.53%        3.82%        (0.29)%    (7.59)%
equivalent (2)(3)
Net interest margin (2)       3.45%        3.66%        (0.21)%    (5.74)%
Average earning assets/total  91.76%       91.15%       0.61%      0.67%
average assets
Average loans/average         90.19%       90.29%       (0.10)%    (0.11)%
deposits
Average noninterest
deposits/total average        29.73%       28.90%       0.83%      2.87%
deposits
Allowance for loan            1.19%        1.29%        (0.10)%    (7.75)%
losses/period end loans
Nonperforming assets to       1.12%        1.61%        (0.49)%    (30.43)%
period end assets
Period end equity/period end  12.53%       12.71%       (0.18)%    (1.42)%
total assets
Efficiency ratio (1)          74.32%       72.56%       1.76%      2.43%

(1) Excludes gain on available for sale securities
(2) Includes bank-owned life insurance
(3) Presented on a tax-equivalent basis



Selected Financial Highlights (unaudited)
TOWNEBANK
December31, 2013
(dollars in thousands)

                                                     Increase/  % Increase/
Twelve Months Ended December  2013         2012         (Decrease) (Decrease)
31,
                                                               
Results of Operations:                                          
Net interest income           $143,895   $144,284   $ (389)    (0.27)%
Noninterest income (1)        89,916       81,184       8,732      10.76%
Gain on investment securities 611          3,005        (2,394)    (79.67)%
Noninterest expenses          168,792      158,749      10,043     6.33%
Provision for loan losses     4,248        16,155       (11,907)   (73.70)%
Income before income tax and  61,383       53,569       7,814      14.59%
noncontrolling interest
Provision for income tax      17,135       13,964       3,171      22.71%
expense
Net income                    44,248       39,605       4,643      11.72%
Net income attributable to    (2,486)      (1,674)      (812)      48.51%
noncontrolling interest
Net income attributable to    41,762       37,931       3,831      10.10%
TowneBank
Preferred stock dividends and 4,227        6,226        (1,999)    (32.11)%
accretion
Net income available to       37,535       31,705       5,830      18.39%
common shareholders
Net income per common share - 1.16         1.03         0.13       12.62%
basic
Net income per common share - 1.16         1.03         0.13       12.62%
diluted
Period End Data:                                                
Total assets                  $4,672,997 $4,405,923 $267,074 6.06%
Total assets - tangible       4,552,935    4,286,921    266,014    6.21%
Earning assets (2)            4,296,486    4,033,813    262,673    6.51%
Loans (net of unearned        3,235,989    3,133,507    102,482    3.27%
income)
Allowance for loan losses     38,380       40,427       (2,047)    (5.06)%
Goodwill and other            120,061      119,002      1,059      0.89%
intangibles
Nonperforming assets          52,287       70,988       (18,701)   (26.34)%
Noninterest bearing deposits  1,037,028    978,818      58,210     5.95%
Interest bearing deposits     2,530,076    2,401,235    128,841    5.37%
Total deposits                3,567,104    3,380,052    187,052    5.53%
Total equity                  585,318      559,880      25,438     4.54%
Total equity - tangible       465,257      440,877      24,380     5.53%
Common equity                 499,850      418,606      81,244     19.41%
Common equity - tangible      379,789      299,604      80,185     26.76%
Book value per common share   14.39        13.30        1.09       8.20%
Book value per common share - 10.93        9.52         1.41       14.81%
tangible
Daily Average Balances:                                         
Total assets                  $4,507,233 $4,201,452 $305,781 7.28%
Total assets - tangible       4,387,578    4,087,603    299,975    7.34%
Earning assets (2)            4,123,527    3,811,846    311,681    8.18%
Loans (net of unearned
income), excluding nonaccrual 3,158,448    2,910,406    248,042    8.52%
loans
Allowance for loan losses     39,698       40,100       (402)      (1.00)%
Goodwill and other            119,655      113,850      5,805      5.10%
intangibles
Noninterest bearing deposits  1,022,168    904,512      117,656    13.01%
Interest bearing deposits     2,415,178    2,370,003    45,175     1.91%
Total deposits                3,437,346    3,274,516    162,830    4.97%
Total equity                  574,558      545,566      28,992     5.31%
Total equity - tangible       454,903      431,717      23,186     5.37%
Common equity                 451,912      404,565      47,347     11.70%
Common equity - tangible      332,257      290,716      41,541     14.29%
Key Ratios:                                                     
Return on average assets      0.93%        0.90%        0.03%      3.33%
Return on average assets -    0.95%        0.93%        0.02%      2.15%
tangible
Return on average equity      7.27%        6.95%        0.32%      4.60%
Return on average equity -    9.18%        8.79%        0.39%      4.44%
tangible
Return on average common      8.31%        7.84%        0.47%      5.99%
equity
Return on average common      11.30%       10.91%       0.39%      3.57%
equity - tangible
Net interest margin-fully tax 3.61%        3.92%        (0.31)%    (7.91)%
equivalent (2)(3)
Net interest margin (2)       3.54%        3.84%        (0.30)%    (7.81)%
Average earning assets/total  91.49%       90.73%       0.76%      0.84%
average assets
Average loans/average         91.89%       88.88%       3.01%      3.39%
deposits
Average noninterest
deposits/total average        29.74%       27.62%       2.12%      7.68%
deposits
Allowance for loan            1.19%        1.29%        (0.10)%    (7.75)%
losses/period end loans
Nonperforming assets to       1.12%        1.61%        (0.49)%    (30.43)%
period end assets
Period end equity/period end  12.53%       12.71%       (0.18)%    (1.42)%
total assets
Efficiency ratio (1)          72.19%       70.41%       1.78%      2.53%

(1) Excludes gain on available for sale securities
(2) Includes bank-owned life insurance
(3) Presented on a tax-equivalent basis

CONTACT: For more information contact:
         G. Robert Aston, Jr.,
         Chairman and CEO,
         (757) 638-6780
        
         Clyde E. McFarland, Jr.,
         Senior Executive Vice President and CFO,
         757-638-6801
 
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