Annual Shareholder’s Meeting May 22, 2012 1. Call To Order 2.

Annual Shareholder’s

MeetingMay 22, 2012

1

Call To Order

2

Board of Directors

Kathleen Bentz

Lino Canalia

Dr. Paul Chemello

PeterFeit

JosephPascale

Michael Perry

George Reynolds

ThomasRiordan

Peter Selleck

Robert Taylor

JoanWator

3

Town Center Bank Officers

Robert Taylor President/CEO/CFO

Joseph Hogan Sr. Vice President

Deanie Clare Sr. Vice President/Branch Manager

Karen Morgan Vice President/Corporate Secretary

Gina Persiani Asst. Vice President/Branch Manager

Sarah Neighbors Asst. Vice President

Eileen Pallisard Officer/IT Operations

4

Appointment of Inspector

5

Notice of Quorum Report

6

Election of Directors

7

Question and Comment Period

8

Current Economic Environment

9

10

Banking Landscape

• Delinquent loans and other real estate owned have leveled off

• Capital remains under pressure and this will continue to be the norm in the industry

• Deposits continuing to grow, as is cash and liquidity– People have faith in the banking industry

• Portfolio yields are still falling• Regulatory and Dodd-Frank burden unlikely to lift

anytime soon

2011 Performance(Dollar amounts in thousands)

11

2009 2010 2011

Assets $148,786 $141,350 $115,684

Loans $90,662 $88,387 $76,934

Investments $46,224 $38,938 $27,231

Deposits $107,103 $107,113 $100,917

Borrowings $22,500 $20,500 $5,250

Net interest margin 2.91% 2.74% 3.24%

Pre-provision earnings (loss)

$1,099 $2,055 $336

Net Income (loss) $(1,074) $(4,343) $(4,209)

Quarterly PerformanceAs of or for the Quarter Ended

(Dollar amounts in thousands)

3/31/11 6/30/11 9/30/2011 12/31/2011 03/31/2012

Assets $137,790 $129,583 $118,204 $115,684 $114,481

Loans, net $85,348 $79,955 $80,351 $76,934 $73,162

Investments $36,711 $34,523 $26,501 $27,231 $17,918

Deposits $106,607 $102,237 $102,109 $100,917 $105,171

Borrowings $19,500 $15,500 $5,250 $5,250 -

Net Interest Margin 2.93% 3.24% 3.46% 3.40% 3.32%

Net Interest Income $965 $1,028 $991 $962 $913

Non-interest Income $160 $89 $282 $203 $238

Non-interest Expense $1,257 $1,336 $1,911 $1,546 $1,295

Net Inc (Loss) Before Prov. $138 $61 $(95) $232 $27

Provision for Loan Loss $(1,738) $(83) $(406) $(614) $(16)

Provision for OREO Loss $(270) $(279) $(543) $(613) $(171)

Net Income (Loss) $(1,870) $(301) $(1,044) $(995) $(160)12

13

2010 2011 3/31/12

Residential Real Estate $28,585 $23,584 $22,703

Commercial Real Estate 36,479 31,063 29,637

Commercial 9,123 9,148 9,153

Consumer 16,019 14,791 13,301

Total Loans $90,206 $78,586$74,79

4

Deferred Loan origination fees & costs

518 780 771

Allowance for Loan Losses (2,337) (2,432) (2,403)

Loans, net $88,387 $76,934 $73,162

Loan Portfolio Mix(Dollar amounts in thousands)

Loans by ClassAs of 12/31/11

(Dollar amounts in thousands)

14

Pass Watch Substandard TotalResidential RE:

1-4 family, owner occupied $17,253 $300 $2,683 $20,236 1-4 family, non-owner occupied 2,148 1,002 198 3,348

Commercial RE:Commercial, owner occupied 6,503 1,533 929 8,965 Commercial, non-owner occupied 10,782 489 873 12,144 Land development 2,257 362 3,203 5,822 Farmland 98 4,034 - 4,132

Commercial 6,963 1,187 998 9,148 Consumer

Indirect automobile loans 9,098 - - 9,098 Consumer, non-real estate 5,597 96   5,693

Total $60,699 $9,003 $8,884 $78,586

15

Pass Watch Substandard TotalResidential RE:

1-4 family, owner occupied $17,669 $286 $1,379 $19,334 1-4 family, non-owner occupied 1,946 1,225 198 3,369

Commercial RE:Commercial, owner occupied 6,438 1,521 925 8,884 Commercial, non-owner occupied 10,827 486 871 12,184 Land development 2,264 362 2,490 5,116 Farmland 91 3,362 - 3,453

Commercial 5,601 2,566 986 9,153 Consumer

Indirect automobile loans 7,937 - - 7,937 Consumer, non-real estate 5,223 116  25 5,364

Total $57,996 $9,924 $6,874 $74,794

Loans by ClassAs of 3/31/12

(Dollar amounts in thousands)

Liquidity (Cash Resources)As of March 31, 2012(Dollar amounts in thousands)

Total Availabilit

y

Used or Pledged

Unused Capacity

Federal Reserve Secured Borrowing $ 2,500 $ - $ 2,500

Federal Funds Line 7,000 - 7,000

Securities Portfolio 17,918 9,057 8,861

Federal Funds Sold and Interest-Bearing Deposits with Banks 16,057 - 16,057

Total $ 43,475 $ 9,057 $ 34,418

16

•Primary funding is provided by deposits. The above sources are supplemental.

Regulatory Capital(Dollar amounts in thousands)

ActualConsent Order Requirement

Excess Capital Above

Minimum

Amount Ratio Amount Ratio

March 31, 2012

Total capital to risk weighted assets

$9,824 11.84% $10,788

13.00% $(964)

Tier 1 capital to risk weighted assets

$8,770 10.57% N/A N/A -

Tier 1 capital to average assets

$8,770 7.57% $10,420

9.00% $(1,650)

17

2012 Plan– Bank’s Assets will shrink to $100 million through prepayment of

FHLB Advances (done) and non-renewal of wholesale CDs• This will increase Tier I Ratio 1%

– Decrease Non-Performing Assets by $2.3 million• Actively market Bank Owned Properties

• Negotiate and litigate with delinquent borrowers to collect highest amount possible

• Recently negotiated a recovery on a loan at $300,000 higher than the charge off balance. This is one of the first significant recoveries. This will not be the last. We expect more going forward.

– Recover charged off loans from borrowers through negotiation and litigation

• Recently finalized a legal settlement on an owned property which will allow us to recover at least $300,000

18

2012 Plan cont’d

• Seek and obtain high quality loans

• Maintain competitive rates on deposits to attract long term relationships

• Continue to keep operating costs low

• Raise Capital

19

2012 Plan cont’d

• Add new products and services– Mobile scanning– Upgrade online banking– E-checking– Rewards debit card

• Actively market as a Community Bank

20

Raise Capital

• Exercise Stock Warrants– 1 Warrant for each original 5 shares of stock

purchased– Exercise price at $3.00 per share– Example: If you purchased 250 shares of stock, you

received 50 warrants to buy 50 shares of stock at $3.00 each

– 50 shares x $3.00 = $150.00 Total Purchase Price

21

Raise Capital

• Exercise Stock Warrants – Cont’d– When does exercise date expire?– Dollar cost averaging – exercise 50 warrants

at $3.00 each on 250 shares purchased at $10.00 each and will give an average purchase price of $8.83

22

Raise Capital

• Stock Rights Offering– Offer additional shares to be purchased

– Each shareholder will be offered a defined amount of shares which will allow the shareholder to maintain the same proportional level of ownership

– The Board will then have the option to re-offer the unexercised shares at a later date to all purchasers of the stock through the stock rights offering

– As a goal we hope to raise $3.0 million from the warrants and the stock rights offering

23

Questions and Comments

24

Report by Inspectors of Election

Formal Announcements of Voting Results

25

Adjournment

26