CommunityOne Bancorp      July 29, 2014   Second Quarter 2014 Earnings Presentation
 Presenters         Brian Simpson      Chief Executive Officer         David Nielsen      Chief Financial Officer         Neil Machovec      Chief Credit Officer           2
 Forward Looking Statements & Other Information              Forward Looking Statements   This presentation contains certain forward-looking statements within the safe harbor rules of the federal securities laws.   These statements generally relate to COB’s financial condition, results of operations, plans, objectives, future   performance or business. They usually can be identified by the use of forward-looking terminology, such as “believes,”   “expects,” or “are expected to,” “plans,” “projects,” “goals,” “estimates,” “may,” “should,” “could,” “would,” “intends to,”   “outlook” or “anticipates,” or variations of these and similar words, or by discussions of strategies that involve risks and   uncertainties. Forward looking statements are subject to risks and uncertainties, including but not limited to, those risks   described in COB’s Annual Report on Form 10-K for the year ended December 31, 2013 under the section entitled   “Item 1A, Risk Factors,” and in the Quarterly Reports of Form 10-Q and other reports that are filed by COB with the   Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking   statements, which are subject to numerous assumptions, risks and uncertainties, and which change over time. These   forward-looking statements speak only as of the date of this presentation.  Actual results may differ materially from   those expressed in or implied by any forward looking statements contained in this presentation.   We assume no duty   to revise or update any forward-looking statements, except as required by applicable law.   Non-GAAP Financial Measures   In addition to the results of operations presented in accordance with Generally Accepted Accounting Principles (GAAP),   COB management uses and this presentation contains or references, certain non-GAAP financial measures, such as   core earnings, core noninterest expense, core noninterest expense to average assets, core noninterest income, and   tangible shareholders’ equity. COB believes  these non-GAAP financial measures provide information useful to   investors in understanding our underlying operational performance and our business and performance trends as they   facilitate comparisons with the performance of others in the financial services industry; however, these non-GAAP   financial measures should not be considered an alternative to GAAP. The non-GAAP financial measures contained   within this presentation should be read in conjunction with the audited financial statements and analysis as presented in   COB’s Annual Report on Form 10-K as well as the unaudited financial statements and analyses as presented in COB’s   Quarterly Reports on Form 10-Q.  A reconciliation of non-GAAP measures to the most directly comparable GAAP   measure is included within tables in the presentation or with the appendix to this presentation.     3
 Operating Highlights    4th consecutive profitable quarter    NIBT of $3.0 million   – Increase of 133% from 1Q 2014,   $6.0 million better than prior year   – Core earnings grew 55% in 2Q   2014 to $2.6 million    Loan growth was strong and broad   based across all lines of business   – Portfolio grew $50.1 million in 2Q,   16% annualized growth rate    Positive credit quarter    – NPA’s fell to 2.7% of assets    – Provision recovery of $1.7 million   – 12 bps annualized net charge-offs    Net interest income grew 2%   – Net of non-cash accretion, net   interest income grew 9% year   over year and at an 11%   annualized rate in 2Q 2014   – NIM of 3.40% vs. 3.43% in 1Q    $5.4 million (22%) reduction in year   over year NIE   – Core NIE fell 2% from 1Q 2014   – NIE to average assets at 3.47%   – $0.4 million US Treasury sale   expenses drove quarterly   increase in NIE   4   Quarterly Performance Metrics   Dollars in thousands except per share data 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014   Net income (loss) before taxes (2,947)$          4,292$          1,241$           1,300$          3,028              Net income (loss) (3,183)            4,006            2,290             1,277             2,792              Net income (loss) per share (0.15)              0.18               0.11               0.06               0.13                 Return on average assets (0.62%) 0.79% 0.45% 0.26% 0.56%   Return on average equity (14.5%) 21.0% 11.0% 6.2% 12.7%   Net interest margin 3.27% 3.76% 3.52% 3.43% 3.40%   Core noninterest expense to average assets   1   3.59% 3.42% 3.34% 3.59% 3.47%   Loans held for investment 1,189,413     1,195,142    1,212,248     1,219,785     1,269,865      Deposits 1,811,485     1,790,608    1,748,705     1,767,930     1,763,765      NPA's to total assets 4.7% 4.1% 3.2% 2.9% 2.7%   1 Non-GAAP measure.  See page 9 for reconciliation to GAAP presentation.   Quart rly Results   Results of Operatio   Dollars in thousands 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014   N t interest income 5 14$         17 382$        16 464$        15 479$        15 18$         Recovery f Provision (Provision) for loan losses 1,057             350                (1,8 0)            684                1,685              Noninterest income 5,247             4,487            4,147             3,943             4,893              Noninterest expense (24,665)          (17,927)         (17,550)         (18,806)         (19,268)           Net income (loss) before tax (2,947)            4,292            1,241             1,300             3,028              Income tax benefit (expense) (236)               (286)              1,049             (23)                 (236)                Net income (loss) (3,183)            4,006            2,290             1,277             2,792              Core Earnings   1   1,821$           4,698$          3,808$           1,642$          2,551$                1  Non-GAAP measure.  See Appendix for reconciliation to GAAP presentation.
 5    Very strong loan growth in 2Q   – Loans held for investment grew $50.1 million (4%) in 2Q; Annualized   growth of over 16%   – Organic loan growth of $34.8 million; annualized growth of 14%   – Growth rate and loan to deposit ratio of 72% both ahead of plan   – Growth across all business lines, especially commercial, and does not   reflect impact of recent LPO and staff additions   – Asset resolution is less a headwind          Grow loans          Deposits up $15.1 million, or 1%, since year end, 2% annualized growth rate   – Deposits were lower in 2Q by $4.2 million   – Core deposits fell 2.1% in the quarter on seasonal declines in interest   bearing DDA accounts and declines in money market accounts   – Treasury Management product and mobile banking infrastructure   investments on track   – Noninterest bearing deposits up $6.3 million in 2Q    Grow core deposits          Credit resolution activities are ahead of schedule   – Reduced NPAs by 9% in 2Q;  NPA ratio of 2.7% vs year end goal of 2.3%   – Reduced classified assets by $22 million YTD; 2014 goal of $40 million   – Bank classified asset ratio at 56%, down from 67% last quarter             Resolve remaining credit   issues          Year over year reduction in core noninterest expenses of 6%   – YTD expenses are lower than our internal plans.  Significant vendor   contract related savings beginning in the second half of 2014   – 11% year over year reduction in FTEs   – Expect annual run rate decline of over $1.0 million in regulatory costs based   on improvements in capital, earnings and asset quality   – Core NIE to average assets ratio of 3.47% better than goal    Invest in new businesses   while maintaining focus on   expenses         Progress on 2014 Goals   5
 6    Hired 2 experienced commercial and real estate bankers to start a Raleigh Loan   Production Office in June   – Raleigh is NC’s 2nd largest and fastest growing economic hub   – Expect to hire 1-2 additional commercial bankers    Hired team of 4 experienced commercial and real estate bankers in Greensboro   in July   – New Regional Banking President and new Greensboro Market President   – Greensboro is the largest city in the Piedmont Triad, the 3rd largest   market in NC    Hired team of 2 commercial and real estate bankers to start a Winston-Salem   Loan Production Office   – Winston-Salem is the 2nd largest city in the Triad    Distinctive lending model driving success   – Experienced and focused C&I and CRE bankers provide more insightful   advice and better solutions than generalists   – Deal team approach ensures responsiveness          Accelerate loan growth by   expanding commercial and   real estate resources and   geographic reach         Loan Growth Initiatives   6    Hired experienced mortgage executive to lead new non-branch origination   channel   – Charlotte, Raleigh and Piedmont Triad   – Focused on realtors and builders    Expanding existing indirect auto finance business with platform investments                Accelerate loan growth in   consumer and mortgage   lending
 Net Interest Income    Net interest income grew 2%   – Net of non-cash accretion, net   interest income grew 9% year   over year and at an 11%   annualized rate in 2Q 2014    Net interest margin improved 13   bps year over year from 2Q 2013;    3 bps decline from 1Q to 3.40%     Average earning assets grew   $24.3 million during 2Q 2014 on   strong loan growth   – Average loans grew $29.1   million     Earning asset yield fell 3 bps in   2Q on reduced loan accretion   – Loan yield excluding accretion   was flat at 4.39%   – Loan accretion on purchased   impaired loans was $0.7   million in 2Q 2014 vs. $0.9   million in 1Q 2014   – Securities yield up 5 bps to   2.72%    2Q cost of interest bearing   deposits was flat at 48 bps    Liability costs rose 2 bps as a   result of 1Q actions to hedge and   extend duration    7   Quarterly Loan and Securities Yields Quarterly Margin and Cost of Deposits   0.0%   1.0%   2.0%   3.0%   4.0%   5.0%   6.0%   2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014   Yield on Loans Yield on Investment Securities   0.0%   0.5%   1.0%   1.5%   2.0%   2.5%   3.0%   3.5%   4.0%   2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014   Cost of Interest Bearing Deposits N t Interest Margin   Quarterly Results   Average Balances, Yields and Net Interest Margin   Dollars in thousands 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014   Average loans (includes loans held for sale) 1,114,841$   1,188,357$  1,199,309$   1,209,714$  1,238,847$       Average yield 5.21% 5.35% 4.97% 4.73% 4.66%   Average loans and securities 1,692,304     1,784,130    1,785,541     1,770,270     1,788,879      Average earning assets 1,895,137     1,839,359    1,859,379     1,830,822     1,855,092         Average yield 3.85% 4.29% 4.05% 3.98% 3.95%   Average interest bearing liabilities 1,675,133     1,606,302    1,611,915     1,585,272     1,581,777         Average rate 0.65% 0.61% 0.61% 0.63% 0.65%      Average cost of interest bearing deposits 0.54% 0.51% 0.50% 0.48% 0.48%   Net interest margin 3.27% 3.76% 3.52% 3.43% 3.40%   Net interest rate spread 3.20% 3.68% 3.44% 3.35% 3.31%   Net interest income 15,414$         17,382$        16,464$        15,479$        15,718$
 Noninterest Income    Noninterest income increased   24% during 2Q   – Securities gains of $720   thousand during the   quarter from sale of an   SBIC investment   – Core noninterest income   grew 6% ($0.2 million) to   $4.2 million    Mortgage income rose $87   thousand (50%) from last   quarter on 70% increase in   volume to $42.4 million   – $15.4 million of loans   originated for sale to   Fannie Mae    Service charge income grew   4% in 2Q 2014 to $1.6 million   on better NSF and ODP   activity    Cardholder and merchant   service income rose 9% on   stronger debit card and   merchant activity levels    Wealth fee income increased   11% in the quarter on   continued robust investment   and wealth opportunities   8   Quarterly Results   Noninterest Income   Dollars in thousands 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014   Service charges on deposit accounts 1,681$        1,858$       1,798$        1,564$        1,619$         Mortgage loan income 921             420            235            174            261              Cardholder and merchant services income 1,174          1,161         1,127          1,113         1,209           Trust and investment services 394             329            341            358            399              Bank-owned life insurance 276             267            267            252            278              Other service charges, commissions and fees 337             365            356            352            332              Securities gains, net 345             50              -                 -                720              Other income 119             37              23              130            75                Total noninterest income 5,247$        4,487$       4,147$        3,943$        4,893$         Less:       Securities gains, net 345             50              -                 -                720              Core noninterest income  1 4,902$        4,437$       4,147$        3,943$        4,173$              1  Non-GAAP measure.  Reconciliation included in this table.
 Noninterest Expense    Continued cost control reduced   noninterest expense (NIE) by   $5.4 million, or 22%, year over   year    Core NIE fell $0.4 million (2%)   from 1Q, on personnel and   professional fee declines   – 6% year over year decline    Average FTE was reduced by   18, or 3%, during 2Q   – 11% FTE reduction from a   year ago from branch   closures and branch staffing   model implementation    2Q NIE up $0.5 million over 1Q   – Unfunded commitment   reserve of $0.2 million driven   by strong loan growth   – $0.4 million of expenses from   the sale of the US Treasury’s   investment   – OREO expense up $0.7   million on appraisal timing   concentration    FDIC and regulatory costs   declining based on capital,   earnings, and asset quality   improvements               9   Quarterly Results   Noninterest Expense   Dollars in thousands 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014   Personnel expense 10,807$         9,663$          9,512$           10,393$        9,956$            Net occupancy expense 1,671             1,558            1,331             1,553             1,512              Furniture, equipment and data processing expense 2,094             2,050            2,126             2,003             2,047              Professional fees 760                 222                625                633                467                  Stationery, printing and supplies 187                 136                135                162                173                  Advertising and marketing 179                 150                141                153                147                  Other real estate owned expense 3,332             (98)                 21                   261                954                  Credit/debit card expense 473                 627                618                595                604                  FDIC insurance 664                 646                663                639                595                  Loan collection expense 1,146             1,120            548                657                551                  Merger-related expense 1,989             -                     -                      -                      -                       Core deposit intangible amortization 352                 352                351                352                352                  Other expense 1,011             1,501            1,479             1,405             1,910              Total noninterest expense 24,665$         17,927$        17,550$        18,806$        19,268$          Less:   Other real estate owned expense 3,332$           (98)$              21$                261$              954$               Merger-related expense 1,989             -                     -                      -                      -                       US Treasury sale expenses -                      -                     -                      -                      409                  Loan collection expense 1,146             1,120            548                657                551                  Branch closure and restructuring expenses 15                   (105)              178                183                7                      Mortgage and litigation accruals (370)               (117)              -                      (75)                 7                      Rebranding expense 58                   6                    -                      -                      -                       Core noninterest expense    1   18,495$         17,121$        16,803$        17,780$        17,340$          Average Quarterly FTE Employees 630                 608                596                576                558
 4% 5% 3% 5% 4%   26% 26% 29% 27% 27%   51% 51% 60% 60% 62%   8% 8% 8% 8% 7%   0%   10%   20%   30%   40%   50%   60%   70%   80%   90%   100%   2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014   Other assets   Loans   Investment securities   Cash and bank balances   Balance Sheet    Total assets were essentially   flat as we continued rotation   from securities and cash to   loans   – Loans grew to 62% of assets   at the end of 2Q 2014, an   increase of 22% from a year   ago    Cash decreased $34.5 million   in 2Q as a result of loan growth    Investment portfolio decreased   from $551.5 million in 1Q to   $546.2 million in 2Q   – Includes increase from   reduction in AFS unrealized   loss of $7.6 million as a result   of declining interest rates   during the quarter    Portfolio positioned to fund loan   growth    Portfolio weighted toward liquid   GSE MBS      10   Quarterly Balance Sheet Composition   Quarterly Balance Sheet   Dollars in thousands 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014   Cash and interest bearing bank balances 88,470$         103,074$     67,430$        104,951$      70,477$          Investment securities 608,207         593,396        566,409        551,528        546,165          Loans and loans held for sale, net 1,168,404     1,172,489    1,187,299     1,195,707     1,247,655      Other real estate owned 35,762           33,179          28,395           24,624          21,871            Intangible assets 11,608           11,402          11,119           10,802          10,501            Other assets 123,862         123,633        124,380        120,869        116,844             Total assets 2,036,313$   2,037,173$  1,985,032$   2,008,481$  2,013,513$    Deposits 1,811,485$   1,790,608$  1,748,705$   1,767,930$  1,763,765$    Borrowings 124,117         147,663        142,165        140,406        143,594          Other liabilities 24,665           18,100          13,801           14,814          13,457            Equity 76,046           80,802          80,361           85,331          92,697               Total liabilities and equity 2,036,313$   2,037,173$  1,985,032$   2,008,481$  2,013,513$
 1,197,876 1,214,083 1,221,746   1,271,630   -16.00%   -12.00%   -8.00%   -4.00%   0.00%   4.00%   8.00%   12.00%   16.00%   200,000   400,000   600,000   800,000   1,000,000   1,200,000   1,400,000   2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014   Commercial RE Construction Consumer/HELOC   1-4 Family Residential Purchased Residential Non pass loans   Total Loans Organic Growth Rate Annualized   1,193,489   Loan Portfolio    Total loans including LHFS   grew $49.9 million in 2Q 2014;    annualized growth rate of 16%   – All lines of business grew   loans during the quarter    Total pass rated loans grew by   $63.1 million; annualized   growth rate of 23%   – Credit headwinds abating   – Includes purchase of   residential mortgage loan   pool of $19.6 million to offset   runoff in the purchased   mortgage portfolio    Organic loans (excluding   purchased residential loans)   grew $34.8 million; 14%   annualized growth rate    Non-pass rated loans fell by   $13.2 million, or 10%    Loan portfolio composition   balanced between consumer   and commercial exposure    1-4 family residential mortgage   loans held for investment   stable at 40% of loans    11   Quarterly Loan Portfolio Mix   Loan Portfolio Growth Rates By Category   Dollars in thousands 2Q 2013 1Q 2014 2Q 2014 $ % Annual %   Commercial and Commercial Real Estate 363,025      381,733      397,905      16,172        4% 17%   RE Construction 46,440        54,331       61,125        6,794         13% 50%   Consumer/HELOC 185,787      191,030      200,336      9,306         5% 19%   1-4 Family Residential 237,000      252,996      268,656      15,660        6% 25%   Pass Rated Organic Loans 832,252      880,089      928,022      47,932        5% 22%   Purchased Resi Mortgage Loans 193,273      207,590      222,723      15,133        7% 29%   Non Pass Rated Organic Loans 167,964      134,067      120,886      (13,181)       (10%) (39%)   Total Loans 1,193,489    1,221,746   1,271,630   49,884        4% 16%   Total Organic Loans 1,000,216    1,014,156   1,048,907   34,751        3% 14%   Total Pass Rated Loans 1,025,525    1,087,679   1,150,744   63,065        6% 23%   2Q Growth
 17% 17% 17% 18% 18%   18% 20% 20% 20% 19%   4% 4% 5%   5% 5%   24% 25% 26%   25% 24%   20% 19% 19%   18% 17%   3% 2% 2% 1% 3%   13% 13% 13% 13% 14%   0%   20%   40%   60%   80%   100%   2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014   Noninterest-bearing demand Interest-bearing demand Savings   Money market Time deposits < $100,000 Brokered   Time deposits > $100,000   Deposits    Year to date deposits have   increased by $15.1 million, or   1%, and an annualized growth   rate of 2%    Deposits fell by $4.2 million   (0.2%) during 2Q on seasonally   lower interest bearing demand   deposit accounts and declines in   money market balances    Increase in brokered CD’s of   $22.3 million during the quarter   to pre-fund 3Q brokered CD   maturities and extend liability   duration   – Other CD balances   essentially flat during the   quarter, down $3.9 million    Low cost core fell 1% to 66% of   deposits     Cost of interest bearing deposits   was flat at 48 bps, and the cost   of all deposits was also stable at   40 bps   12   Quarterly Deposit Mix   Co   re      N   o   n      Co   re      Quarterly Deposits   Dollars in thousands 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014   Noninterest-bearing demand 304,992$      308,178$     290,461$      315,515$      321,829$       Interest-bearing demand 334,087         350,889        347,791        346,344        333,260          Savings 80,682           80,435          80,507           85,038          85,451            Money market 442,720         442,887        447,672        448,037        431,803          Brokered 47,220           29,218          29,218           25,468          47,783            Time deposits < $100,000 360,874         343,856        323,661        310,786        301,795          Time deposits > $100,000 240,910         235,145        229,395        236,742        241,844               Total deposits 1,811,485$   1,790,608$  1,748,705$   1,767,930$  1,763,765$    Total Time Deposits 649,004         608,219        582,274        572,996        591,422          Low Cost Core Deposits 1,162,481     1,182,389    1,166,431     1,194,934     1,172,343      Core Deposits 1,523,355    1,526,245   1,490,092   1,505,720   1,474,138
 Deferred Tax Asset and Valuation Allowance    Consolidated net deferred tax   asset of $150.4 million at 2Q   2014   – $5.2 million currently   reflected on balance sheet   and in equity   – $145.2 million remaining   DTA valuation allowance     The Company evaluates each   quarter the continued need for   the valuation allowance on the   deferred tax assets      13   Deferred Tax Asset Rollforward   Dollars in Millions Net DTA   DTA   Valuation   Allowance   Unreserved   Net DTA   Beginning Balance, March 31, 2014   156.2$           148.0$          8.2$                 Net income, tax strategies and other adjustments (5.8)                (2.8)                (3.0)                  Ending Balance, June 30, 2014 150.4$           145.2$          5.2$
 Capital and Liquidity    CommunityOne Bancorp &   CommunityOne Bank capital   ratios continued to increase   in 2Q   – Bank leverage ratio of   7.86%   – Bancorp and Bank are   “well capitalized”    Loans to deposits ratio rose   to 72% in 2Q, the highest   since the recap, as a result   of strong loan growth during   the quarter    Tangible shareholders’   equity impacted by   – $2.8 million earnings    – $4.7 million, net of tax,   unrealized gains in AFS   portfolio   14   Quarterly Capital and Liquidity Ratios   2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014   Well   Capitalized########## ##########   CommunityOne Bancorp   Leverage 5.38% 5.83% 5.96% 6.20% 6.35% 5.00%   Tier 1 risk based capital 8.76% 9.18% 9.48% 9.67% 9.70% 6.00%   Total risk based capital 12.08% 12.38% 12.62% 12.80% 12.67% 10.00%   Tangible common equity to tangible assets 3.18% 3.43% 3.51% 3.73% 4.10%   Loans to deposits 66% 67% 69% 69% 72%   Cash and investment securities to deposits 38% 39% 36% 37% 35%   CommunityOne Bank   Leverage 6.95% 7.39% 7.49% 7.74% 7.86% 5.00%   Tier 1 risk based capital 11.31% 11.62% 11.94% 12.09% 12.02% 6.00%   Total risk based capital 12.57% 12.88% 13.20% 13.38% 13.28% 10.00%   T ngible Sharehold rs' Equi y Rollforward   Dollars in thousands 2Q 2014   Tangible shareholders' equity, March 31, 2014 74,529$          Other comprehensive gain - AFS securities, net of tax 4,660               Other comprehensive loss - retirement plans (255)                 Net income 2,792               Stock compensation to directors 27                    Decrease in intangible assets, net 301                  Stock compensation to employees 142                  Tangible shareholders' equity, June 30, 2014   1 82,196$                 1  Non-GAAP measure.  See Appendix for reconciliation to GAAP presentation.
 $59   $51   $35 $34 $32   $36   $33   $28   $25   $22   $0   $10   $20   $30   $40   $50   $60   $70   $80   $90   $100   2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014   M   ill   io   ns    o   f   D   ol   la   rs   Nonperforming loans OREO and foreclosed assets   $47 $44 $46 $43 $41   $121   $115   $96   $91   $80   $0   $25   $50   $75   $100   $125   $150   $175   $200   $225   $250   2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014   M   ill   io   ns    o   f   D   ol   la   rs   Special Menti n Loans Classified Loans   Asset Quality    Continued asset quality   improvement in 2Q   – Classified loans decreased   by $11.1 million (12%)   – Nonperforming loans   reduced to 2.5% of total   loans, from 5% a year ago   – NPA’s reduced to 2.7% of   assets    The ALL has been reduced to   $24.0 million from $26.0 million   at end of Q1, reflecting the    improved asset quality and   lower annualized charge-off   rates    ALL is 1.89% of loans held for   investment    $0.4 million of 2Q net charge-   offs; annualized net charge-off   rate of 12 bps for the quarter   and 7 bps 2014 year to date   15   Quarterly Asset Quality Trends   28% decline 44% decline   Quarterly Asset Quality   Dollars in thousands 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014   Allowance for loan losses (ALL) 25,085$         25,387$        26,785$        26,039$        23,975$          Nonperforming loans to Total loans 5.0% 4.3% 2.9% 2.8% 2.5%   Nonperforming assets to Total assets 4.7% 4.1% 3.2% 2.9% 2.7%   Annualized net charge-offs to Average loans 1.26% (0.22%) 0.14% 0.02% 0.12%   Allowance for loan loss to Total loans 2.11% 2.12% 2.21% 2.13% 1.89%
 $15.9   $12.8 $11.6 $10.2 $9.1   $31.4   $27.4   $18.4 $19.9 $19.4   $9.8   $10.3   $4.7 $3.4   $2.8   $0   $20   $40   $60   $80   2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014   $ i   n   Mi   lli   on   s   Consumer   Real estate - construction   RE - Commercial   RE - 1-4 Family   Commercial and   agricultural   Nonperforming Assets    Non-performing assets fell by   $5.0 million (9%) during the   quarter, and $41.2 million (44%)   since 2Q 2013    Nonperforming loans fell by $2.3   million (7%) in 2Q, and by $27.3   million (46%) since 2Q 2013     OREO dispositions continue to   outpace foreclosure additions     – OREO reduced by $2.8   million (11%) in 2Q and $13.9   million (39%) since 2Q 2013    As of quarter end, an additional   $4.2 million of OREO (19%) was   under contract for sale   16   Quarterly Nonperforming Loan Composition   46% decline   Nonperforming Loans and OREO   Dollars in thousands 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014   Commercial and agricultural 1,654$           590$             516$              450$              400$               Real estate - construction 9,783             10,266          4,677             3,437             2,773              Real estate - mortgage:       1-4 family residential 15,917           12,822          11,580           10,151          9,083                  Commercial 31,380           27,425          18,380           19,888          19,398            Consumer 269                 104                12                   32                  31                        Total nonperforming loans 59,003           51,207          35,165           33,958          31,685            OREO and other foreclosed assets 35,762           33,179          28,395           24,624          21,871                Total nonperforming assets 94,765$         84,386$        63,560$        58,582$        53,556$
 Portfolio and Allowance for Loan Losses    Originated loans of $1.1 billion   with ALL of $19.4 million at 2Q   – 1.76% ALL    Granite PC loans of $28.0 million   with ALL of $0.4 million at 2Q   – 1.56% ALL    No net credit costs in 2Q on   originated and PC loan portfolio   – $1.7 million in recovery of   provision offset by net charge-   offs of $0.4 million    Granite PI loans   – $141.9 million remaining   carrying value   – $4.1 million ALL at 2Q 2014   – 2.91% ALL   – Additional $1.9 million in   accretable yield forecasted   based on 2Q cash flow   forecast      17   Quarterly Loan Portfolio and ALL   2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014   Originated loans 971,086      990,460      1,023,984   1,043,263   1,101,736     Granite purchased impaired (PI) loans 189,160      176,594      161,651      149,033      141,924        Granite purchased contractual (PC) loans 29,167        28,088       28,449        29,450        27,970         Total loans 1,189,413$  1,195,142$ 1,214,084$  1,221,746$ 1,271,630$   Originated loan ALL (20,841)       (20,927)      (20,603)       (20,286)       (19,417)        Granite PI loan ALL (4,066)         (4,066)        (5,650)         (5,237)        (4,123)          Granite PC loan ALL (178)            (394)           (532)           (516)           (435)             Total ALL (25,085)$     (25,387)$     (26,785)$     (26,039)$     (23,975)$       Originated loan ALL / Originated loans (2.15%) (2.11%) (2.01%) (1.94%) (1.76%)   Granite PI ALL  / Granite PI loans (2.15%) (2.30%) (3.50%) (3.51%) (2.91%)   Granite PC ALL / Granite PC loans (0.61%) (1.40%) (1.87%) (1.75%) (1.56%)   T ota l ALL 2.11% 2.12% 2.21% 2.13% 1.89%
 18    We are positioned to continue strong loan growth   – New LPOs in Raleigh and Winston Salem, investment in new   commercial and real estate bankers in Greensboro and start up of   non-branch residential mortgage sales channel should position   Company to grow loans on an accelerated basis   – Charlotte market is seeing improved levels of economic activity   – Expanding consumer and mortgage business          Grow loans          Continued focus on deposits in second half of 2014   – Several deposit based initiatives are expected to grow core   deposits   – Commercial relationship growth should increasingly add to deposit   base   – Treasury Management product and mobile banking infrastructure   investments are expected to attract and retain deposits    Grow core deposits          Credit resolution activities are expected to be on or ahead of schedule   – Reduce NPAs to 2.3% by year end   – Reduce classified assets by $40 million   – Reduce Bank classified asset ratio to 45%             Resolve remaining credit   issues          We expect to continue to reinvest expense savings into new businesses   – Expect run rate decline of over $1.0 million in FDIC insurance and   related regulatory costs based on improved capital, earnings and   asset quality   – Expect additional vendor related cost reductions in the second   half of 2014 and into 2015    Invest in new businesses   while maintaining focus on   expenses         Closing Comments   18
 Appendix   19
 Non-GAAP Measures    Reconciliation of non-   GAAP measures to the   most directly comparable   GAAP measure   20   Reconciliation of Non-GAAP Measures   Dollars in thousands 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014   Total shareholders' equity 76,046$      80,802$      80,361$      85,331$      92,697$        Less:       Goodwill (4,205)         (4,205)        (4,205)         (4,205)        (4,205)              Core deposit and other intangibles (7,403)         (7,196)        (6,914)         (6,597)        (6,296)          Tangible shareholders' equity 64,438$      69,401$      69,242$      74,529$      82,196$        Reconciliation of Non-GAAP Measures   Dollars in thousands 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014   Net income (loss) (3,183)$       4,006$       2,290$        1,277$        2,792$         Less taxes, credit costs and nonrecurring items:       Income tax benefit (expense) (236)            (286)           1,049          (23)             (236)                 Gain on sales of securities 345             50              -                 -                720                  Other real estate owned expense (3,332)         98              (21)             (261)           (954)                 Recovery of (Provision for) loan losses 1,057          350            (1,820)         684            1,685               Mortgage and litigation accruals 370             117            -                 75              (7)                    Loan collection expense (1,146)         (1,120)        (548)           (657)           (551)                 Branch closure and restructuring expenses (15)             105            (178)           (183)           (7)                    US Treasury sale expenses -                 -                -                 -                (409)                 Rebranding expense (58)             (6)              -                 -                -                      Merger-related expense (1,989)         -                -                 -                -                  Core Earnings 1,821$        4,698$       3,808$        1,642$        2,551$