TowneBank (NasdaqGS:TOWN) entered into a definitive merger agreement to acquire Paragon Commercial Corporation (NasdaqCM:PBNC) for approximately $330 million on April 26, 2017. Under the terms of the merger agreement, common shareholders of Paragon will receive a fixed exchange ratio of 1.7250 shares of TowneBank common stock for each outstanding share of Paragon common stock. Apart from this, each option to purchase shares of Paragon common stock will be converted into an option of TowneBank on the same terms and conditions applicable to Paragon stock options, as adjusted based on the exchange ratio. Similarly, each Paragon restricted stock award that is outstanding immediately before the effective date of the transaction will be converted into a restricted stock award of TowneBank on the same terms and conditions applicable to the Paragon restricted stock award, but taking into account any acceleration of vesting thereof in Paragon’s equity plans or individual award agreements, and as adjusted based on the exchange ratio. Paragon will continue to operate under its own name after the transaction. In case of termination, Paragon will have to pay a termination fee of $12.0 million to TowneBank. Robert C. Hatley, President and Chief Executive Officer of Paragon, will continue in his current role as the President and Chief Executive Officer of the Paragon Division as well as the President of TowneBank’s North Carolina operations. Robert C. Hatley and Howard Jung, Paragon Board Chairman will join the Board of Directors of TowneBank. Paragon's executive management team consisting of Matthew C. Davis, Executive Vice President and Chief Operating Officer, James F. Fielding, Senior Vice President and Chief Credit Officer, Brian K. Reid, Triangle Market President and Phillip R. Jurney, Charlotte Market President, will continue in their current Paragon roles. Two Paragon directors will be appointed to TowneBank's Board of Directors. Additionally, TowneBank has executed employment contracts with members of Paragon's executive management, commercial lenders, private bankers and client development officers. Paragon will operate in the Raleigh, Charlotte, and Cary markets as Paragon Bank, a division of TowneBank. The transaction is subject to customary regulatory approvals from Federal Deposit Insurance Corporation, Virginia State Corporation Commission and the North Carolina Commissioner of Banks, approval of Board of Directors of both Paragon and TowneBank, approval of Paragon's shareholders, listing of Towne shares on NASDAQ, Federal tax opinion within the meaning of Section 368(a) of the code and execution of employment agreemens with certain key employees of Paragon. The Paragon Shareholder meeting to approve the transaction will occur on November 28, 2017. As on April 26, 2017, the transaction was unanimously approved by the Board of Directors of Paragon and TowneBank. As of January 10, 2018, Paragon Shareholders approved the transaction. The transaction is expected to close in the fourth quarter of 2017. As of July 27, 2017, the transaction is expected to close in January 2018. As of August 8, 2017, the transaction is subject to close in the first quarter of 2018. The transaction is expected to be immediately accretive to TowneBank’s earnings in 2018 and also thereafter. In addition, the transaction is expected to be nominally dilutive, less than 1%, to TowneBank’s tangible book value at closing. TowneBank’s capital ratios are expected to continue to exceed well-capitalized regulatory standards. Scott M. Clark and Josh Shropa of Sandler O'Neill + Partners, L.P. acted as financial advisors and Scott H. Richter of Williams Mullen acted as legal advisor to TowneBank. Raymond James & Associates, Inc. acted as financial advisor and Todd H. Eveson of Wyrick Robbins Yates & Ponton LLP acted as legal advisor to Paragon in the transaction. Raymond James are entitled to receive a transaction fee equal to 1.40% of the aggregate transaction value of the proposed merger, a substantial portion of which is contingent upon completion of the merger. Regan & Associates, Inc. acted as the information agent to Paragon and will receive a fee of $10,000 for their services. Computershare, Inc. acted as the transfer agent to TowneBank in this transaction. TowneBank (NasdaqGS:TOWN) completed the acquisition of Paragon Commercial Corporation on January 26, 2018. Following the merger, TowneBank will operate in the Raleigh, Charlotte, and Cary markets as Paragon Bank a division of TowneBank.