RALEIGH, N.C., January 26, 2015 – Paragon Commercial Corporation today reported that its earnings for 2014 increased approximately 62% to $8.0 million compared to $4.9 million for the same period in 2013. Fully diluted earnings per share for 2014 were $1.77 compared to $1.11 for 2013. For the fourth quarter ended December 31, 2014 and 2013, net income increased from $1.4 million to $2.7 million, an increase of 98%. The increase was primarily driven by an increase in net interest income as a result of period over period growth. Fully diluted earnings per share for the same periods in 2014 and 2013 were $0.60 and $0.31, respectively.

Net interest income increased by approximately $1.4 million during the fourth quarter of 2014 compared to 2013. Net interest income totaled approximately $9.3 million during the period, representing a net interest margin of 3.53% on a tax equivalent basis. Paragon's net interest margin, on a tax equivalent basis, increased from 3.38% during the fourth quarter of 2013.

Total deposits increased by $3.8 million during the fourth quarter reaching $883.6 million at December 31, 2014. Total deposits have increased by $113.5 million, or 15% since the same period 2013. Year over year, demand account balances increased by $35.0 million while money market and interest checking accounts increased by $98.6 million, increases of 42% and 36%, respectively.

Loans outstanding increased by $47.5 million during the quarter from $820.9 million at September 30, 2014 to $868.4 million at December 31,2014, an annualized increase of 23%. Loans have increased by $101.0 million in the twelve months since December 2013.

Total consolidated assets on December 31, 2014 were $1.17 billion compared to $1.04 billion at the end of 2013.

There was no provision for loan losses recorded during the fourth quarter of 2014. The Company recorded a negative provision of $601,000 which added to income for the fourth quarter of 2013. The allowance for loan losses as a percentage of total loans at 2014 was 0.79%. However, the Company’s allowance as a percentage of non-performing loans was more than 8 times greater than the median for North Carolina banks under $5 billion in assets as of the end of the third quarter. The provision for loan losses for the years ended 2014 and 2013 were $538,000 and $156,000, respectively.

Asset quality for the Company remains very strong. Nonperforming loans were 0.05% of total loans at December 31, 2014. As a comparison, all North Carolina banks up to $5 billion in asset size had a median ratio of 1.07% for that same ratio in September 2014, or more than 21x more problem loans as a percent of their portfolio. Past due loans plus nonperforming loans as a percent of loans for the Company as of December 31, 2014 were 0.04%. That same median ratio for the above mentioned peer group for September 30, 2014 was 1.95%.

For the year ended December 31, 2014, non-interest income was $704,000 compared to a loss of $2.1 million for the year ended 2013. Year over year, the Company reduced its remaining foreclosed real estate portfolio by $3.2 million to $15.0 million.

Non-interest expense in the fourth quarter of 2014 was $5.6 million compared to $6.2 million in the fourth quarter of 2013. The decrease was driven primarily by fewer nonrecurring expenses including lower problem loan related costs on a year over year basis.

QUOTES:

“2014 marks our best year in just about every measure since our founding. We achieved record net income, significant growth, and continued strong credit quality all in the same year”, says Robert C. Hatley, President and CEO.

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ABOUT PARAGON BANK:

Founded in Raleigh, NC, in 1999, Paragon Bank, with assets of $1.2 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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Information in this press release contains forward-looking statements. These statements involve risks and uncertainties that could cause actual results to differ materially, including without limitation, the effects of future economic conditions, governmental fiscal and monetary policies, legislative and regulatory changes, the risks of changes in interest rates, and the effects of competition. Paragon Bank does not undertake a duty to update any forward-looking statements in this press release.