RALEIGH, N.C., October 28, 2014 – Paragon Commercial Corporation today reported that its year-to-date net income through the third quarter of 2014 increased approximately 48% to $5.3 million compared to $3.6 million for the same period in 2013. Fully diluted earnings per share for the first nine months of 2014 were $1.16 compared to $.80 for the 2013. For the third quarter ended September 30, 2014 and 2013, net income decreased from $2.2 million to $1.5 million, a decrease of 30%. The decrease was primarily driven by a negative provision for loan losses taken in the third quarter of 2013. Fully diluted earnings per share for the same periods in 2014 and 2013 were $.34 and $.49, respectively.

Net interest income increased by approximately $792,000 during the third quarter of 2014 compared to 2013. Net interest income totaled approximately $8.6 million during the same period, representing a net interest margin of 3.45% on a tax equivalent basis. Paragon's net interest margin, on a tax equivalent basis, increased from 3.37% during the third quarter of 2013.

Total deposits increased by $16.7 million during the third quarter reaching $879.8 million at September 30, 2014. Total deposits have increased by $126.2 million, or 17% since the same period in 2013.

Loans outstanding increased by $18.6 million during the quarter from $802.3 million in June, 2014 to $820.9 million at the end of September. Loans have increased by $73.5 million or 10% in the twelve months since September 2013.

Total consolidated assets on September 30, 2014 were $1.14 billion compared to $1.04 billion at the end of 2013.

There was no provision for loan losses recorded during the third quarter of 2014. The Company recorded a negative provision of $480,000 which added to income for the third quarter of 2013. Annualized net recoveries for the third quarter of 2014 were .03% of average loans compared to net charge-offs of .59% for the third quarter of 2013. The allowance for loan losses as a percentage of total loans at 2014 was .85%. However, the Company’s allowance as a percentage of non-performing loans was more than 4½ times greater than the median for North Carolina banks under $5 billion in assets as of the end of the second quarter. The provision for loan losses for the six months ended 2014 and 2013 were $538,000 and $757,000, respectively.

Asset quality for the Company remains very strong. Nonperforming loans were 0.09% of total loans at September 30, 2014. As a comparison, all North Carolina banks up to $5 billion in asset size had a median ratio of 1.28% for that same ratio in June 2014. Past due loans as a percent of loans for the Company as of September 30, 2014 were 0.21%. That same median ratio for the above mentioned peer group for June 30, 2014 was 2.43%.

For the nine months ended September 30, 2014, non-interest income was $234,000 compared to a loss of $2.1 million for the first nine months of 2013. The Company reduced its remaining foreclosed real estate portfolio by $1.4 million to $14.8 million.

Non-interest expense in the third quarter of 2014 was $5.7 million compared to $4.8 million in the second quarter of 2013. The increase was driven primarily by market expansion as the Company has opened a new location in Cary, North Carolina, an operations center in Raleigh and has added additional staff to facilitate the growth.

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“Management and the Board are extremely excited about Paragon Bank’s earnings and overall balance sheet growth over the past 12 months,” said Bob Hatley President and CEO of Paragon Bank. “We are well positioned for further growth and profitability in 2015.”

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ABOUT PARAGON BANK:

Founded in Raleigh, NC, in 1999, Paragon Bank, with assets of $1.14 billion, provides a private banking experience to businesses, professionals, executives, entrepreneurs and other individuals. Paragon’s commitment to an extraordinary client experience is built on the philosophy that clients deserve well prepared bankers who are present and fully available, and proactive about helping clients achieve their goals. Banking services are provided through highly responsive professionals, an extensive courier service, online and mobile technologies, free world-wide ATM access, and a select number of strategically placed offices in Raleigh, Cary and Charlotte, N.C. For more information, visit http://ParagonBank.com.

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