Towne Bancorp Reports Record Annual Earnings.

PHOENIX -- Towne Bancorp, the parent company of Towne Bank of Arizona (OTCBB: TWNE), today reported that continued strong loan growth led to fourth quarter profits of $386,000, or $.22 per diluted share. For the year ended at 12-31-06, net income totaled $1,454,000, or $.83 per diluted share, compared to a gain of $632,000, or $.36 per diluted share, in 2005. It is important to note that the results for the year ended 12/31/05 are very positively affected by $676,000 in tax credits associated with start-up expenses and operating losses (see note 1).

Net interest income before provision for loan losses grew by 83% to $2,131,000 in the fourth quarter of '06 compared to the fourth quarter of '05. Total non-interest expense increased to $1,016,000 at 12/31/06 from $733,000 at 12/31/05. The company was able to report a return on average assets (ROAA) of 1.06% & 1.16% for the fourth quarter and year ended 2006, respectively.

Net loans increased 111% to $147.9 million at the end of the fourth quarter 2006, compared to $70.1 million a year earlier. Net interest margin (NIM) remains very strong at 5.87% for the fourth quarter of '06 compared to 6.32% in the fourth quarter a year earlier. Year to date NIM for December 31, 2005 & 2006 were 5.59% & 6.34% respectively.

Credit quality remains very good with $-0- and $11,000 in net charge-offs for the fourth quarter and year to date. "We have one non performing asset which is represented by a 9.124% ($1,075,000) participation in a downtown Phoenix residential and commercial mixed use development project being lead by another Phoenix based community bank. The loan is well secured and in the process of collection and we do not foresee any loan loss exposure associated with this loan at this time," said S. Rick Meikle, CEO. The resulting NPA/Assets ratio is .69%. The company's allowance for loan losses stands at 1.44% of gross loans compared to 1.02% at 12-31-05.

Total deposits increased 188% to $118.4 million at 12-31-06, compared to $41.1 million at 12-31-05. Non-interest bearing deposits increased 122% to $6.9 million at 12-31-06, compared to $3.1 million at 12-31-05. Interest bearing deposits increased 12.5% to $8.6 million at 12-31-06, compared to $7.6 million at 12-31-05. Time deposits increased 239% to $103.0 million at 12-31-06, compared to $30.4 million at 12-31-05.

"During the first quarter of 2007 the bank will enhance its ability to attract core deposits by adding additional dedicated deposit gathering personnel and joining the Federal Home Loan Bank (FHLB) as well as adding new personal and corporate internet banking products, including the launching of our remote capture deposit initiative," Meikle said.

"We are pleased to announce that we will be opening a Scottsdale LPO during the first quarter of '07. Furthermore, we are very happy to report that we have been fortunate to obtain two 'franchise players' in the Payson market who are long time seasoned and well connected commercial bankers in the marketplace. We are initially entering the Payson market with an LPO presence, however we strongly feel the need to apply for a full service branch will arise in the near future because of the opportunity there," said Mr. Meikle.

Note 1: The 2005 results reported are only for Towne Bank of Arizona as the Holding Company was not formed until May of 2006. The Full Year 2006 performance of Towne Bank of Arizona, without the inclusion of the Holding Company is as follows: ROAA 1.20%, ROAE 4.30%, Efficiency Ratio 41.80%, NIM 6.34%, and Net Income per Share (diluted) $0.85.

Statements concerning future performance, developments or events, expectations for earnings, growth and market forecasts, and any other guidance on future periods, constitute forward-looking statements, which are subject to a number of risks and uncertainties that are beyond Towne Bancorp's control and might cause actual results to differ materially from the expectations and stated objectives. Factors which could cause actual results to differ materially include, but are not limited to, regional and general economic conditions, management's ability to generate continued improvement in asset quality and profitability, changes in interest rates, deposit flows, real estate values, competition, loan delinquency rates, the successful operation of the newly opened branches and loan offices, changes in accounting principles, practices, policies or guidelines, changes in legislation or regulation, other economic, competitive, governmental, regulatory and technological factors affecting operations, pricing, products and services. Accordingly, these factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on such statements. Towne Bancorp undertakes no responsibility to update or revise any forward-looking statements.

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Note 1: The 2005 results are only of Towne Bank of Arizona as the Holding Company was not formed until May of 2006. The Full Year 2006 performance of Towne Bank of Arizona, without the inclusion of the Holding Company, is as follows: ROAA 1.20%, ROAE 4.30%, Efficiency Ratio 41.80%, NIM 6.34%, and Net Income Per Share (diluted) $0.85.