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TowneBank To Acquire Monarch Financial Holdings And Monarch Bank

TowneBank (TOWN) and Monarch Financial Holdings Inc., the parent company of Monarch Bank (MNRK), announced the signing of a definitive merger agreement pursuant to which TowneBank will acquire Monarch creating a $7.3 billion hometown bank serving Hampton Roads, Richmond and Northeastern North Carolina.

As per the terms of the agreement, common shareholders of Monarch will receive 0.8830 shares of TowneBank common stock for each share of Monarch. This implies a deal value per share of $18.57 or approximately $220.6 million based on TowneBank's closing stock price of $21.03 on Wednesday, December 16, 2015.

Based on financials reported on September 30, 2015 the combined companies would have total assets of $7.3 billion, deposits of $5.8 billion and loans of $5.4 billion.

Using a 20-day moving average of TowneBank's closing stock price implies a deal value per share of $19.25 or $229 million on an average share price of $21.81. The share price and total deal value will be determined utilizing the conversion ratio of 0.8830 shares of Monarch common stock for each share of Towne Bank common stock at the merger closing date, expected to be in the second quarter of 2016 subject to shareholder and regulatory approvals.

Under the proposed terms, the transaction is expected to be accretive to TowneBank's earnings in 2016 and thereafter. Further it is anticipated that the transaction will be immediately accretive to TowneBank's capital ratios, which already exceed well-capitalized regulatory standards.

Brad Schwartz will join Aston on the Towne Corporate Management Group as Senior Executive Vice President and Chief Operating Officer along with TowneBank President and Chief Banking Officer, J. Morgan Davis; William Littreal, Senior Executive Vice President and Chief Strategy Officer; and Clyde McFarland, Senior Executive Vice President and Chief Financial Officer.

Neal Crawford, Monarch Bank President, will join Towne as President and Chief Executive Officer of Towne Financial Services Group. William Morrison, Chief Executive Officer of Monarch Mortgage will become Chairman and Chief Executive Officer of TowneBank Mortgage and Realty Group succeeding Jacqueline Amato, currently TowneBank Mortgage CEO, who is planning to retire at the end of the 2016 calendar year.

Monarch Chairman, Jeffrey Benson, will join the TowneBank Corporate Board along with Monarch Directors, Elizabeth Patterson, Dwight Schaubach and Robert Oman. Schwartz, Crawford and Morrison will also join the board.

Monarch Directors, Virginia Sancilio Cross, Taylor Grissom, Lawton Baker and Joe Covington will be elected to the Towne Financial Services Group Board of Directors.

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