2017 ANNUAL REPORT

To create a bank where every individual has value and is treated with dignity and respect.

This is the beginning of our “blue ocean” . . . the foundation on which we will continue to build a strong company. GENERAL CORPORATE INFORMATION

ANNUAL MEETING REGULATORY AND SECURITIES COUNSEL The annual meeting of shareholders of North State Wyrick Robbins Yates & Ponton LLP Bancorp will be held on Tuesday, June 5, 2018, at 4:00 4101 Lake Boone Trail, Suite 300 p.m. at North Ridge Country Club, 6612 Falls of Neuse Raleigh, NC 27607 Road, Raleigh, North Carolina 27615. AUDITED CONSOLIDATED FINANCIAL STATEMENTS MARKET FOR COMMON EQUITY AND RELATED AND ANNUAL DISCLOSURE STATEMENT SHAREHOLDER MATTERS A copy of North State Bancorp’s Audited Consolidated As of December 31, 2017, we had 5,835,464 shares Financial Statements as of and for the years ended of common stock outstanding, which were held by December 31, 2017, and 2016 are available without approximately 180 beneficial owners. During 2015, the charge to shareholders upon written request to Stacy R. Company filed for a change in tax status to become an S Reedy, Executive Vice President and Chief Financial Officer, Corporation. As an S Corporation, shares of common stock North State Bancorp, PO Box 18367, Raleigh, NC 27619, are traded across the Company’s desk and are not traded and are on our website at NorthStateBank.com. on any exchange. This Annual Report and the above referenced Audited INDEPENDENT AUDITORS Consolidated Financial Statements as of and for the years Dixon Hughes Goodman LLP ended December 31, 2017, and 2016 serve as the annual 2501 Blue Ridge Road disclosure statement furnished pursuant to the FDIC’s Suite 500 rules and regulations. The Annual Report and the Audited Raleigh, NC 27607 Consolidated Financial Statements have not been reviewed or confirmed for accuracy or relevance by the FDIC.

BANKING AND MORTGAGE OFFICES

Corporate Headquarters and Fayetteville Southeast Raleigh Banking Office – North Raleigh North State Bank Mortgage North State Bank Mortgage 6204 Falls of Neuse Road 2153 Valleygate Drive 1708 Trawick Road Raleigh, NC 27609 #202 Suite 209 919.719.9400 Fayetteville, NC 28304 Raleigh, NC 27604

North State Bank Garner Wake Forest Mortgage Operations 835 Highway 70 West 14091 Falls of Neuse Road 6200 Falls of Neuse Road Garner, NC 27529 Raleigh, NC 27614 Suite 300 Raleigh, NC 27609 Lexington West Raleigh North State Bank Mortgage 2413 Blue Ridge Road Apex 503 E. Center Street Raleigh, NC 27607 North State Bank Mortgage Lexington, NC 27292 56 Hunter Street Wilmington Suite 210 North Hills 1411 Commonwealth Drive Apex, NC 27502 4270 The Circle at North Hills Wilmington, NC 28403 Raleigh, NC 27609 Downtown Raleigh 230 Fayetteville Street Suite 100 Raleigh, NC 27601

2 Contents

General Corporate Information 2 Selected Financial Highlights 4–5 Letter from the President & CEO 6–11 Condensed Consolidated Balance Sheets 12 Condensed Consolidated Statements of Operations 13 Independent Auditors’ Report 14 Corporate Board of Directors 15 Local Advisory Boards 16 Management Team and Staff 17–19

3 SELECTED FINANCIAL HIGHLIGHTS

As of or for the Year Ended December 31, 2017* 2016* 2015** 2014 2013 (Dollars in thousands, except per share data) OPERATING DATA: Total interest income $ 30,655 $ 27,997 $ 26,017 $ 24,982 $ 24,165 Total interest expense 2,743 2,645 1,648 1,909 2,831 Net interest income 27,912 25,352 24,369 23,073 21,334 Provision for (recovery of) loan losses (446) (1,586) (768) (371) 1,030 Net interest income after provision for (recovery of) loan losses 28,358 26,938 25,137 23,444 20,304 Non-interest income 18,346 19,684 10,853 8,468 7,740 Non-interest expense 37,431 36,369 29,765 24,470 24,425 Income before income taxes 9,273 10,253 6,225 7,442 3,619 Provision for income taxes — 24 3,718 2,710 1,219 Net income $ 9,273 $ 10,229 $ 2,507 $ 4,732 $ 2,400

PER SHARE DATA: Earnings per share—basic $ 1.60 $ 1.80 $ 0.35 $ 0.64 $ 0.32 Earnings per share—diluted $ 1.60 $ 1.80 $ 0.35 $ 0.64 $ 0.32 Tangible book value $ 6.99 $ 6.60 $ 5.75 $ 6.41 $ 5.72

WEIGHTED AVERAGE SHARES OUTSTANDING: Basic 5,779,343 5,687,095 7,259,034 7,447,347 7,442,949 Diluted 5,779,343 5,687,095 7,259,034 7,451,941 7,445,424

SELECTED YEAR-END BALANCE SHEET DATA: Total assets $ 835,962 $ 786,199 $ 754,023 $ 686,448 $ 673,900 Loans—held for sale 33,183 66,931 33,046 47,328 34,267 Loans 658,436 621,674 602,364 531,841 483,567 Allowance for loan losses 3,951 4,346 6,039 6,711 7,924 Deposits 754,820 709,515 677,560 618,730 601,325 Borrowings 34,091 33,922 33,928 16,799 27,599 Shareholders’ equity 41,897 38,005 32,823 47,871 42,755

SELECTED AVERAGE BALANCES: Total assets $ 835,915 $ 791,637 $ 745,929 $ 695,285 $ 688,152 Loans—held for sale 24,875 38,395 34,059 30,449 45,796 Loans 639,901 612,973 568,096 513,968 491,700 Total interest-earning assets 783,847 742,184 699,725 647,154 632,113 Deposits 755,239 714,981 672,377 624,426 615,680 Borrowings 34,087 34,671 18,850 21,696 27,312 Total interest-bearing liabilities 508,356 489,841 464,573 447,093 465,914 Shareholders’ equity 41,124 36,298 51,325 46,065 42,546

4 As of or for the Year Ended December 31, 2017* 2016* 2015** 2014 2013

SELECTED PERFORMANCE RATIOS: Return on average assets 1.11% 1.29% 0.34% 0.68% 0.35% Return on average equity 22.55% 28.18% 4.88% 10.27% 5.64% Net interest spread(1) 3.36% 3.24% 3.38% 3.43% 3.22% Net interest margin(1) 3.56% 3.42% 3.50% 3.57% 3.38% Non-interest income to total revenue 39.66% 43.71% 30.81% 26.85% 26.62% Non-interest income to average assets 2.19% 2.49% 1.45% 1.22% 1.12% Non-interest expense to average assets 4.48% 4.59% 3.99% 3.52% 3.55% Efficiency ratio 80.92% 80.76% 84.51% 77.58% 84.01%

ASSET QUALITY RATIOS: Nonperforming loans to period-end loans 0.21% 0.28% 0.48% 0.44% 0.87% Allowance for loan losses to period-end loans 0.60% 0.70% 1.00% 1.26% 1.64% Ratio of allowance for loan losses to nonperforming loans 2.90x 2.46x 2.10x 2.89x 1.89x Nonperforming assets to total assets 0.16% 0.26% 0.52% 0.45% 1.00% Net charge-offs (recoveries) to average loans -0.01% 0.02% -0.02% 0.16% 0.53%

CAPITAL RATIOS(2): Total risk-based capital 11.60% 11.62% 12.11% 13.09% 14.80% Tier 1 risk-based capital 11.00% 10.93% 11.08% 11.84% 11.75% CET1 risk-based capital(3) 11.00% 10.93% 11.08% NA NA Leverage ratio 8.68% 8.81% 8.73% 9.27% 8.55% Equity to assets ratio 5.01% 4.83% 4.35% 6.97% 6.34% Average equity to average assets 4.92% 4.59% 6.88% 6.63% 6.18%

OTHER DATA: Number of banking offices 7 7 7 7 7 Number of full time equivalent employees 210 216 194 151 139

*The Company changed its tax election to an S Corporation effective January 1, 2016. Under an S Corporation election, corporate income, gains and losses are passed through to the shareholders. The Company is subject to corporate level taxation on unrealized built-in gains during a five-year recognition period beginning January 1, 2016. Earnings per share for 2016 are represented on a pre-tax basis. **Includes items related to the Company’s change in tax election to an S Corporation. The items include: non-recurring professional fees of $859,000; issuance of $18 million in long-term subordinated debt; the retirement of 1.84 million shares of common stock; $1.5 million deferred tax asset write-off, included in tax expense; a prepaid asset and liability of approximately $6.6 million for remaining share repurchases; and a reclassification of held-to-maturity securities to available-for-sale. (1) Excludes average nonaccrual loans. (2) Capital ratios are for bank only. (3) Introduced as a new capital measure effective January 1, 2015.

5 To our Shareholders, Customers and Friends:

am pleased to report our financial summary of I am! replied his brother Tommy. I’m worried about the 2017 as follows: Total assets, loans and deposits as state of our American society! Iof December 31, 2017, were $836.0 million, $658.4 Well, what bothers you about it? Are you worried about million and $754.8 million respectively compared to the extent of poverty and hunger in the land? totals at December 31, 2016, of $786.2 million, $621.7 million and $709.5 million, for year-over-year increases Oh no, that doesn’t really bother me. of 6.3%, 6.5% and 6.4% respectively. As these results I see. Well, are you concerned about the growing threat indicate, core growth remains strong as we support the of nuclear war? customers and communities we serve. No, that’s not a worry of mine.

I’d like to use the following story to make a point. One Are you upset about the use and abuse of drugs by the of the biggest comedy acts of the 1960s and 1970s youth of America? was The Smothers Brothers. I remember a routine they No, that doesn’t bother me very much. performed on their television variety show that went something like this: Looking rather puzzled, Dick asked, Well, Tom, if you’re not bothered by poverty, hunger, war and drugs, what are you worried about? What’s wrong, Tommy? asked Dick, who was the straight man. You seem a bit despondent. I’m worried about our apathy!

6 The threads that continue to hold this organization together include trusting and trustworthy friendships, which lead to deeper and more effective understanding and, quite frankly, higher levels of efficiency and profitability.

This story clearly shows that apathy is a killer. Apathetic, asked to write the founder’s intent. After much reflection indifferent people will never live lives that matter. This is and thought, it became clear that the intent in establishing why passion is so important—because passion is the very North State Bank was to create a bank where every soul of significance. It’s the fuel. It’s the core. And passion individual has value and is treated with dignity and respect. for helping improve the lives of others is alive and well in our company.

Along those lines, while it is far easier to simply recite our work and financial results in 2017 and in prior years, I’m more interested in telling our story than reciting our history. My intention in this letter is to provide you with a deeper understanding of North State Bancorp, including what we do and where we are headed.

Again, we must remind ourselves of why this company was created. Recently, we created a “strategy on a page,” our guiding light into the future, since it includes our founder’s intent, core values and purpose, among other things. As I participated in this strategic process, I was

Executive Management Team

Seated (l to r): Jonathan N. Krieps and Stacy R. Reedy Standing (l to r): Brian S. Hedges, Stacey S. Koble and Amanda M. Lloyd

7 TOTAL ASSETS Throughout my many years in banking, I have witnessed quite (in millions) the opposite of this.

$900 $836 I have learned, and I am still learning, that to get things done $786 $800 $754 you cannot do it alone. Someone once said, “If you want to $686 $700 $674 go quickly, go alone, but if you want to go far, go with others.”

$600 I couldn’t agree more. But others will only want to go, if they are valued and treated well. $500

$400 Furthermore, for others to go along, there must be a purpose

$300 and that purpose here, the reason for opening our doors every day, is to add value to the lives of those we serve. Value $200 can take many forms besides financial, ranging from a timely, $100 warm greeting to creative and responsive financing.

$0 2013 2014 2015 2016 2017 To support our intent and purpose, we strongly believe in operating North State Bank in a spirit of friendship. Getting closer to each other, closer to our customers and closer to our TOTAL DEPOSITS shareholders enables us to have a high level of permission (in millions) to serve with more clarity and consistency. The threads that $800 $755 continue to hold this organization together include trusting $710 $700 $678 and trustworthy friendships, which lead to deeper and more $601 $619 effective understanding and, quite frankly, higher levels of $600 efficiency and profitability. $500

$400 We cannot do all of this by being passive or sitting on the “sideline.” We must have an action-oriented planning process $300 that is continuous and constantly improving. We must look $200 forward because as the saying goes: If there is no faith in the

$100 future, there is no power in the present. We will continue to keep our eyes on our vision of remaining strong and $0 2013 2014 2015 2016 2017 independent, and the highest performing community bank in North Carolina. There will be challenges and shortcomings, because vision is only refined by failure. We will meet the TOTAL LOANS challenges and incorporate the failures into our planning (in millions) process as a means of continuous improvement. As Dr. John

$800 Maxwell, author and speaker, once said, “It is important to remain stubborn about your vision, but flexible with $700 $658 $622 your plan.” $602 $600 $532 $484 $500 I have been learning more and more recently about millennials, individuals born between the years of 1980 and $400 2000. There are currently 85 million millennials in the United $300 States, and I understand that by the year 2020 they will

$200 constitute 50% of the global workforce. I am excited about both working with them and the promise they bring to, not $100 only our company, but to this nation and even the world. $0 2013 2014 2015 2016 2017

8 I believe baby boomers, those born in the wake of World Related to that, I believe that self-centeredness is a major War II between 1946 and 1964, and millennials are similar problem in business today. There are too many individuals in that they want the same thing, and that is to be a part who work in “silos” instead of collaborating and working of something bigger than themselves. Where they differ with others to get more and better things done. It has been is in the process they choose for achieving that goal. said that self-centeredness is the root of effectively every Just because the process is different, does not mean we problem, personal and otherwise. cannot work together. We can. We have made a serious commitment at North State Bank to ensure that age does When we see a group photo in which we are pictured, not separate us as we focus on the “greater good” we can what do we all do? We look at ourselves first. We must accomplish by working together. As publisher Malcolm get beyond that. We must look at the group photo and be Forbes once said, “People who matter most are aware interested in more than how we look. Moving from success everyone else does, too.” to significance requires getting beyond ourselves and including others more in our lives.

Market Presidents

Seated (l to r): West Raleigh Market President Andrew T. Wheeler Jr. and Wilmington Market President Sabrina S. Stephens Standing (l to r): Garner Market President Kevin M. Payne, Wake Forest Market President Joseph L. “Joey” Evans, North Raleigh Market President John H. Norwood, Downtown Raleigh Market President Sharon R. Moe and North Hills Market President M. Dean Gooden Jr.

9 The very best leaders do this as they put others ahead We must move beyond asking “What will I receive?” to of themselves in pursuit of a better place to go together. “What am I going to give?” It has been said that if we It took me quite a while to understand that and I still want to grow, improve and prosper our company, we must struggle, but while my self-interests are important, it is far grow, improve and prosper our people. To that end, we are more important to put others’ interests ahead of mine. deeply committed at North State Bank and I believe we are Zig Zeigler, author and motivational speaker, once said, “If making great progress. High-performing companies simply we help people get what they want, they will do the same have top-performing people. for us.” As such, we will continue to teach our people not only There was a time in my life when I always wanted to win about how to better perform their work, but how to an argument to convince people to go my way. While I was become better people and better leaders of other people. winning arguments, I was losing the hearts and support of We will remain very intentional about this. We must other people. This is the antithesis of leadership. We must, constantly be prepared for this. As the late, great Coach as leaders, connect with others to put them first instead of John Wooden once said, “When opportunity comes, it trying to “come in first.” is too late to prepare.” We must always be prepared for opportunities which will help us get better at adding value There is so much more to do out there and we must go to the lives of those we serve. through many doors of opportunity to move from success to significance. Finding and going through one door is an We must remember this: What we move toward moves event. Going through many doors is a lifestyle. toward us. As we continuously move toward our vision, resources begin to move toward us, such as money, people, As we achieve more, we can be deceived into thinking we and materials. When we stop moving, so do the resources. will be happier, satisfied and even fulfilled by getting even We will keep moving in order to keep growing North State more. This leads only to a shallow, hollow existence and Bank in ways that matter. should be avoided. Self-centeredness and fulfillment cannot peacefully coexist. They are completely incompatible.

PRE-TAX NET INCOME TOTAL NET INTEREST INCOME (in thousands) (in thousands)

$12,000 $30,000 $27,912 $10,253 $24,369 $25,352 $10,000 $9,273 $25,000 $23,073 $21,334 $8,000 $7,442 $20,000 $6,225 $6,000 $15,000

$3,619 $4,000 $10,000

$2,000 $5,000

$0 $0 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

10 One of the new ways we will keep moving is to embrace Please join us for our Annual Shareholders’ Meeting on the future through a strategic process called “Blue Ocean Tuesday, June 5, 2018, at 4:00 pm at North Ridge Country Strategy,” from the book of the same name authored by Club on Falls of Neuse Road here in Raleigh. We will share W. Chan Kim and Renée Mauborgne. Most companies more with you at that time about 2017, our progress so focus on competing and “winning” in their existing market far in 2018 and our plans. On behalf of everyone at North spaces. Blue Ocean Strategy is a view of the market State Bank, it is an honor to serve you. We appreciate your universe or community as composed of two types of advocacy, trust, friendship and support. oceans — red oceans and blue oceans. Red oceans are the industries in existence today that most organizations, Very cordially, including banks, fight over. Blue oceans include the customers who have not yet been created, which will yield sound and profitable growth for the future. Accordingly, we plan to move from “market competing” toward “market creation” as we branch out of the red ocean of bloody competition. We look forward to sharing more about this process in the time ahead. Larry D. Barbour President and CEO

It has been said that if we want to grow, improve and prosper our company we must grow, improve and prosper our people. To that, we are deeply committed at North State Bank and I believe we are making great progress.

Division PRESIDENTS (l to r): North State Bank Mortgage President J. Kenneth “Ken” Sykes, Specialized Lending Group President Jonathan E. Hand, CommunityPLUS President Gary L. Woodlief and Government Lending President Lawrence W. “Larry” Moran

11 NORTH STATE BANCORP CONDENSED CONSOLIDATED BALANCE SHEETS (December 31, 2017 and 2016)

2017 2016 (Dollars in thousands) ASSETS Cash and due from banks $ 12,439 $ 17,595 Interest-earning deposits with banks 53,090 9,374 Investment securities available for sale, at fair value 2,214 2,630 Investment securities held to maturity, at amortized cost 25,615 23,309 Loans held for sale 33,183 66,931

Loans 658,436 621,674 Less allowance for loan losses 3,951 4,346 Net loans 654,485 617,328

Accrued interest receivable 1,914 1,503 Federal Home Loan Bank and Federal Reserve stock, at cost 1,749 1,716 Premises and equipment, net 25,026 25,614 Foreclosed assets — 248 Bank owned life insurance 16,066 13,788 Prepaid for unexchanged common stock 1,061 1,172 Other assets 9,120 4,991

TOTAL ASSETS $ 835,962 $ 786,199

LIABILITIES AND SHAREHOLDERS’ EQUITY Deposits: Demand $ 270,936 $ 249,990 Savings, money market and NOW 427,379 410,211 Time 56,505 49,314 Total deposits 754,820 709,515

Accrued interest payable 211 191 Payable for unexchanged common stock 1,061 1,172 Short-term borrowings 505 373 Long-term borrowings, net 33,586 33,549 Accrued expenses and other liabilities 3,882 3,394

TOTAL LIABILITIES 794,065 748,194

Commitments

Shareholders’ equity: Preferred stock, no par value, 1,000,000 shares authorized, none issued — — Common stock, no par value; 10,000,000 shares authorized; 5,835,464 and 5,756,720 shares issued and outstanding, December 31, 2017 and 2016, respectively 6,088 5,173 Retained earnings 35,874 32,900 Accumulated other comprehensive loss (65) (68)

TOTAL SHAREHOLDERS’ EQUITY 41,897 38,005

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 835,962 $ 786,199

12 NORTH STATE BANCORP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Years Ended December 31, 2017 and 2016)

2017 2016 (Dollars in thousands, except per share data) INTEREST INCOME Loans $ 28,356 $ 25,731 Loans held for sale 750 1,471 Investments 456 365 Dividends and interest-earning deposits 1,093 430 TOTAL INTEREST INCOME 30,655 27,997

INTEREST EXPENSE Savings, money market and NOW 760 706 Time deposits 173 206 Short-term borrowings 1 1 Long-term borrowings 1,809 1,732 TOTAL INTEREST EXPENSE 2,743 2,645

NET INTEREST INCOME 27,912 25,352

RECOVERY OF LOAN LOSSES (446) (1,586)

NET INTEREST INCOME AFTER RECOVERY OF LOAN LOSSES 28,358 26,938

NON-INTEREST INCOME Fees from mortgage operations 13,129 16,630 Fees and gains on sales from SBA operations 3,619 1,531 Gain of sale of available for sale securities — 228 Other 1,598 1,295 TOTAL NON-INTEREST INCOME 18,346 19,684

NON-INTEREST EXPENSE Salaries and employee benefits 22,925 22,165 Occupancy and equipment 4,037 3,838 Data processing and other outsourced services 3,944 3,432 Net cost of foreclosed assets 17 334 Other 6,508 6,600 TOTAL NON-INTEREST EXPENSE 37,431 36,369

INCOME BEFORE INCOME TAXES 9,273 10,253

INCOME TAXES — 24

NET INCOME $ 9,273 $ 10,229

NET INCOME PER COMMON SHARE Basic $ 1.60 $ 1.80 Diluted $ 1.60 $ 1.80

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING Basic 5,779,343 5,687,095 Diluted 5,779,343 5,687,095

13 INDEPENDENT AUDITORS’ REPORT

To the Shareholders and the Board of Directors North State Bancorp Raleigh, North Carolina

The accompanying condensed consolidated financial statements, which comprise the condensed consolidated balance sheets as of December 31, 2017 and 2016, and the related condensed consolidated statements of operations for the years then ended are derived from the audited consolidated financial statements of North State Bancorp as of December 31, 2017 and 2016 and for the years then ended. We expressed an unmodified audit opinion on those audited consolidated financial statements in our report dated March 28, 2018.

The condensed consolidated financial statements do not contain the disclosures required by accounting principles generally accepted in the United States of America. Reading the condensed consolidated financial statements, therefore, is not a substitute for reading the audited consolidated financial statements of North State Bancorp.

Management’s Responsibility for the Condensed Consolidated Financial Statements Management is responsible for the preparation of the condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America.

Auditor’s Responsibility Our responsibility is to express an opinion about whether the condensed consolidated financial statements are consistent, in all material respects, with the audited consolidated financial statements based on our procedures, which were conducted in accordance with auditing standards generally accepted in the United States of America. The procedures consisted principally of comparing the condensed consolidated financial statements with the related information in the audited consolidated financial statements from which the condensed consolidated financial statements have been derived, and evaluating whether the condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America.

Opinion In our opinion, the condensed consolidated financial statements of North State Bancorp as of December 31, 2017 and 2016 and for the years then ended referred to above are consistent, in all material respects, with the audited consolidated financial statements from which they have been derived.

Raleigh, North Carolina March 28, 2018

14 Corporate Board of Directors

FORREST H. BALL J. KEITH KEENER, MD FRED J. SMITH, JR. President Retired Senior Partner/Nephrologist Chairman of the Board Hartwell Realty, Inc. Wake Nephrology Associates North State Bancorp Garner, NC Raleigh, NC Chief Executive Officer Fred Smith Company LARRY D. BARBOUR THE HONORABLE Clayton, NC President and CEO BURLEY B. MITCHELL, JR. North State Bancorp Retired Chief Justice JACK M. STANCIL and North State Bank North Carolina Supreme Court Private Investments Raleigh, NC Raleigh, NC Retired Certified Public Accountant Founder and Past President JAMES C. BRANCH BARRY W. PARTLO Stancil & Company Personal Investments President and Owner Member, Board of Trustees Retired Agri Supply Company, Inc. GuideStone Financial Services, Dallas, TX Raleigh, NC Garner, NC Member, Board of Trustees YMCA of the Triangle CHARLES T. FRANCIS W. HAROLD (HAL) PERRY Raleigh, NC Attorney and Managing Member Vice Chairman of the Board The Francis Law Firm, PLLC North State Bancorp Raleigh, NC Chief Executive Officer Real Estate Marketing GLENN E. FUTRELL & Consulting, Inc. President/Owner Raleigh, NC Futrell Development, LLC Raleigh, NC

Seated (l to r): Burley Mitchell, Fred Smith, Larry Barbour, Charles Francis and Jim Branch Standing (l to r): Hal Perry, Glenn Futrell, Barry Partlo, Keith Keener, Forrest Ball and Jack Stancil

15 LOCAL ADVISORY BOARDS

DOWNTOWN RALEIGH Jerry E. Jones Mohammad A. “Moe” Malek, DDS Daniel K. Davidian, DDS President President General and Cosmetic Dentist David R. Crabtree Jones Insurance Agency Axion Dentistry Sedation Dental Care and Raleigh Smile Anchor Garner, NC Cary, Clayton, Knightdale, Zebulon, NC Center WRAL-TV 5 Raleigh, NC Raleigh, NC Jason D. “Dan” Moore Mark E. Roberts Managing Member President J. Mark Livingston Robin M. Hammond Ninja Cow Farm Mark Roberts Enterprises, Inc. Certified Public Accountant Retired Attorney Raleigh, NC Raleigh, NC Hughes Pittman & Gupton, LLP Raleigh, NC Raleigh, NC Tracy W. Pleasant Jason and Lisa Schneider Rita Anita Linger, PhD President Partners Robert E. Monroe Executive Director Triangle Auto Sales Schneider Law Group Chairman Recovery Communities of North Carolina Raleigh, NC Raleigh, NC West Raleigh Board North State Bank Raleigh, NC Partner Judy M. Stephenson Jay Street Monroe Wallace & Morden PA A. Patrick Roberts Former Executive Vice President and Owner Raleigh, NC Partner Business Development Officer (retired) Atlantic Realty LLC of NC Roberts Law Group, PLLC North State Bank Raleigh, NC Don L. Oschwald, MD Raleigh, NC Raleigh, NC Plastic Surgeon Damon Washington Specialists in Plastic Surgery, PA Kerry B. Saunders NORTH HILLS President Raleigh, NC Executive Vice President and AA&D Transportation, Inc. Chief Operating Officer William T. Barker Jr. Raleigh, NC Karin Patrick NAI Carolantic Realty President Financial Representative Raleigh, NC Barker Realty, Inc. Henry White Northwestern Mutual Financial Network Raleigh, NC President Raleigh, NC David L. Sherlin Stancil & Company Partner C. Delaine Bradsher Raleigh, NC A. Silvia Ross, MD Holt Sherlin, LLP Owner Rheumatologist Raleigh, NC Bradsher Insurance Agency, Inc. WAKE FOREST Triangle Arthritis & Rheumatology Raleigh, NC Associates Megan Sherron J. Robert Craig Raleigh, NC Assistant Dean of External Relations Robert L. Ford Outreach Pastor Campbell University School of Law Executive Director North Wake Church WILMINGTON Raleigh, NC North Carolina Poultry Federation Wake Forest, NC Raleigh, NC Thomas H. Fetzer Jr. The Reverend Charles R. Tyner Sr. Michael D. Feldbusch, CPA, CFP President Pastor and Chief Executive Officer Victoria M. Herriott, MD Manager Fetzer Strategic Partners White Oak Missionary Baptist Church/ Pediatrician Holden Moss, CPAs Wilmington, NC White Oak Foundation Jeffers, Mann and Artman Pediatrics Raleigh, NC Apex, NC Raleigh, NC Michael W. Head James Gerdts, CCIM President Thomas C. Worth Jr. James F. Jordan Real Estate Broker / Owner CEPCO Property Management Attorney/Owner Principal SquareHat Real Estate Wilmington, NC Thomas C. Worth Jr., Attorney at Law Jordan Law Offices PA Raleigh, NC Raleigh, NC Raleigh, NC R. Steve Smith Gary W. Lyons, CCIM, SIOR President M. Carter Worthy John E. Lawton Senior Vice President Steve Smith, CPA, PA President Consultant Avison Young Wilmington, NC Carter Worthy Commercial, Inc. Raleigh, NC Raleigh, NC Raleigh, NC Michael F. Stonestreet NORTH RALEIGH Kelly J. MacKay Chairman GARNER Attorney Wilmington Board North State Bank David M. Fajgenbaum, MD Walker, Lambe, Rhudy, Costley & Gill, PLLC President David J. Adams, DMD, MS, PA Chairman Durham, NC CAMS, Inc. Private Practice North Raleigh Board North State Bank Wilmington, NC Garner, NC Orthopaedic Surgeon (retired) George E. Pittman Bone & Joint Surgery Clinic Chairman Alan E. Toll Jonathan D. Adams Raleigh, NC Wake Forest Board North State Bank Attorney/Partner Partner President Toll Ray & Associates, PLLC John D. Adams & Co., CPAs, PLLC Leland E. Garrett, MD FACP FASN CPC Real Living Pittman Properties Wilmington, NC Garner, NC Chief Medical Officer Raleigh, NC Contractor Medical Director Medicare Keith D. Walker David W. Bannister Jurisdictions J&M Thomas G. Walters CEO and President President Palmetto GBA Agency Owner East Carolina Community Development DWB Properties, LLC Columbia SC/Raleigh NC Walters Insurance Agency, Inc. Inc. (ECCDI) Garner, NC Wake Forest, Wendell and Raleigh, NC Beaufort, NC Ronald B. Gridley Johnny G. Blankenship Vice President, Operations WEST RALEIGH Kenneth S. White, MD Vice President CoreCompete Plastic Surgeon / Partner Pipeline Utilities, Inc. Raleigh, NC Jamie Baker Wilmington Plastic Surgery Specialists, PA Raleigh, NC President Wilmington, NC Shelton Griffin The Lundy Group, Inc Vice President Raleigh, NC Acquisitions and Development York Properties Raleigh, NC 16 MANAGEMENT TEAM AND STAFF

Executive Diane D. Klietsch Bret W. Burgess June A. Sadowski Danyel R. James MANAGEMENT CommunityPLUS Relationship Commercial Banker Commercial Banker Mortgage Loan Officer Banker North Raleigh Wake Forest North State Bank Mortgage Larry D. Barbour CommunityPLUS Lexington President Sondra G. Collins Mark B. Shuffler Chief Executive Officer Sharon R. Moe Mortgage Community Outreach Commercial Banker Laura P. Jeffries Market President Officer Wilmington Mortgage Underwriting Brian S. Hedges Downtown Raleigh North State Bank Mortgage Supervisor Executive Vice President Southeast Raleigh Mark W. Snyder North State Bank Mortgage Chief Credit Officer Lawrence W. Moran Credit Administration Officer Mortgage Operations President, Government Lending Debra C. Cook Bank Operations Jonathan N. Krieps Bank Operations Credit Administration Officer William H. Jones Executive Vice President Bank Operations Susan I. Watkins Mortgage Loan Officer Chief Operations Officer John H. Norwood SBA Processor North State Bank Mortgage Market President Jeffrey H. Cooke Bank Operations Wilmington Amanda M. Lloyd North Raleigh Mortgage Loan Officer Executive Vice President North State Bank Mortgage Cameron A. Young Kimberly J. Lynch Chief People Officer Margaret U. Pattison West Raleigh Secondary Market Manager Mortgage Underwriter Chief Mortgage Officer North State Bank Mortgage North State Bank Mortgage Stacy R. Reedy North State Bank Mortgage S. Alexander Covington Mortgage Operations Winston-Salem Executive Vice President Mortgage Operations IT & Cyber Security Manager Chief Financial Officer Bank Operations James C. McMillan Kevin M. Payne ASSISTANT VICE Mortgage Loan Officer Stacey S. Koble Market President Elaine C. Crabtree PRESIDENT North State Bank Mortgage Vice President Garner Officer Manager Lexington Corporate Secretary Garner Bert V. Borngesser IV Shannon S. Reaves Mortgage Systems Administrator Sean J. Nock Chief Mortgage Sales Officer Paige I. Donnald North State Bank Mortgage Mortgage Market Manager SENIOR VICE North State Bank Mortgage Senior Mortgage Loan Officer Mortgage Operations North State Bank Mortgage PRESIDENT Mortgage Operations North State Bank Mortgage Southeast Raleigh North Hills Andrew P. Callanan B. Wayne Adams Robert D. Ross Commercial Credit Analyst Linda F. O’Dell Enterprise Risk and Compliance Commercial Banker Lauryn M. Fowler Bank Operations Accounting Supervisor Manager North Raleigh Loan Operations Manager Finance Risk Management Bank Operations Betty A. Crocker Donald J. Springer Mortgage Loan Officer Adam Parker Debra D. Adcock SBA Business Development Ursula C. Gibson North State Bank Mortgage Audit & Compliance Officer Security & Risk Management Officer Mortgage Operations Manager Charlotte Risk Management Officer North Raleigh North State Bank Mortgage Risk Management Mortgage Operations William P. Duff IV Daniel J. Pedroni Sabrina S. Stephens Mortgage Market Manager Mortgage Loan Officer Kelly T. Arrington Market President D. Worth Joyner III North State Bank Mortgage North State Bank Mortgage Chief Mortgage Operations Wilmington Mortgage Loan Officer Downtown Raleigh Wilmington Officer North State Bank Mortgage North State Bank Mortgage Babette Stone North Raleigh Thomas W. Eller Laura B. Perham Mortgage Operations Director, Credit Administration Mortgage Market Manager Mortgage Compliance Supervisor Bank Operations Laura V. Miller North State Bank Mortgage North State Bank Mortgage Gregory W. Asbelle Retail & Business Banker Mortgage Operations Mortgage Operations Director, Cash Management J. Kenneth Sykes Wilmington Bank Operations President Rhonda E. Faucette S. Boyd Pringle North State Bank Mortgage Tara M. Mistretta Mortgage Loan Officer Mortgage Closing Supervisor JoAnn B. Bratton Mortgage Operations Commercial Banker North State Bank Mortgage North State Bank Mortgage Controller North Hills North Hills Mortgage Operations Finance Andrew T. Wheeler Jr. Market President Kathy M. Nall Sherry P. Green Pamela E. Pritchard Christopher R. Bruffey West Raleigh Human Resources Manager Mortgage Loan Officer Mortgage Loan Officer Senior Commercial Officer Human Resources North State Bank Mortgage North State Bank Mortgage CommunityPLUS Allison W. Wilkins Mortgage Operations Fayetteville Director, Bank Operations Ruth A. Payne Joseph L. Evans Administration Office Manager Gwyndolyn I. Griffin Sharmorrow Proctor Market President North Raleigh Wholesale Mortgage Account Mortgage Underwriter Wake Forest Gary L. Woodlief Officer North State Bank Mortgage President Kelly H. Purcell North State Bank Mortgage Mortgage Operations M. Dean Gooden Jr. CommunityPLUS Deposit Support Manager Mortgage Operations Market President Bank Operations Nevin A. Rohrbaugh North Hills Jason S. Hartley Mortgage Team Manager VICE PRESIDENT Shaun L. Respess Mortgage Loan Officer North State Bank Mortgage Jonathan E. Hand Accounting Manager, Bank North State Bank Mortgage Lexington President, Specialized Lending Casey V. Atwater North Raleigh Lexington Group Commercial Banker Amanda F. Turnage Bank Operations Downtown Raleigh Kyle H. Robbins Catherine M. Hutsell Deposit Support Supervisor SBA Underwriter Mortgage Loan Officer Bank Operations Susan R. Jordan Gina B. Bunch Tennessee North State Bank Mortgage Mortgage Accounting Manager Office Manager Fayetteville Lynn E. Westley North State Bank Mortgage West Raleigh Mortgage Processing Supervisor Mortgage Finance North State Bank Mortgage Wilmington 17 MANAGEMENT TEAM AND STAFF (continued)

Scott A. Wittig Lawrence R. Bevis Deliesha L. Durden Sabina A. Hege Laura E. Little Mortgage Market Manager Courier Deposit Support Assistant Mortgage Underwriter Mortgage Loan Processor North State Bank Mortgage Bank Operations Bank Operations Winston-Salem North State Bank Mortgage Apex Lexington Deborah C. Birkenmeyer James E. Evans Cynthia L. Heidinger Human Resources Assistant Commercial Loan Portfolio Lockbox Operator Nikki N. McCray BANKING OFFICER Human Resources Manager Bank Operations Deposit Support Specialist Downtown Raleigh Bank Operations Danny L. Conner Crystal G. Black Jeremy T. Hickok Commercial Banking Assistant Mortgage Compliance Specialist Mollie B. Ferguson Mortgage Compliance Specialist Chasity E. McCrimmon Wilmington North State Bank Mortgage Lease Processor North State Bank Mortgage Accounting Specialist Mortgage Operations Greenville Mortgage Operations North State Bank Mortgage Jumeekah L. Ingram Mortgage Finance Office Supervisor Melanie E. Blanton Ronda D. Firstbrook James T. Hobgood North Hills Mortgage Loan Officer Assistant Lockbox Support Specialist Mortgage Lock Desk Specialist Grayson R. Merrill North State Bank Mortgage Bank Operations North State Bank Mortgage Commercial Credit Analyst Karen M. Kilmer North Raleigh Mortgage Operations Bank Operations Banker Loan Assistant Deborah E. Fisher Bank Operations Mariah N. Bullock Mortgage Loan Officer Lisa Hobgood Sanjay H. Mishra Teller North State Bank Mortgage Mortgage Loan Processor SBA Business Development Hayley S. Martin Garner Mortgage Operations North State Bank Mortgage Officer Office Supervisor Wilmington Bank Operations Downtown Raleigh Martin J. Burke Shelly C. Foxworth-Hill Mortgage Loan Officer Mortgage Loan Processor William L. Hood Emily I. Molgaard Holly A. Walter North State Bank Mortgage North State Bank Mortgage Commercial Loan Portfolio Lead Teller Office Supervisor Apex Southeast Raleigh Manager West Raleigh Wake Forest Wilmington Jackie L. Butcher Sherryl Fradenburg Angela D. Monroe SBA Specialist Mortgage Post-Closing Specialist Christy B. Jackson Document Quality Assurance BANKING STAFF Bank Operations North State Bank Mortgage Loan Documentation Specialist Specialist Mortgage Operations Bank Operations Bank Operations John Abdella Laurie A. Clark Assistant Network Administrator Mortgage Systems Specialist Carole E. Fraser Daryl Johnson Patrick R. Moore Bank Operations North State Bank Mortgage Lockbox Assistant Mortgage Servicing Specialist SBA Business Development Mortgage Operations Bank Operations North State Bank Mortgage Officer Cody Adcock Bank Operations Tennessee Loan Operations Specialist Tandra L. Clifton Madeliene R. Galindo Bank Operations Teller Teller Paige K. Jones Michele L. Mott North Raleigh Wilmington Mortgage Loan Officer Assistant Office Supervisor James R. Bailey North State Bank Mortgage Wilmington Courier Payton H. Cline JoAnn M. Galloway Wilmington Bank Operations Teller Mortgage Post-Closing Specialist Michele D. Mullins North Hills North State Bank Mortgage Jeffrey S. Kalaman Mortgage Underwriter K. Shay Barkley Mortgage Operations SBA Business Development Fayetteville SBA Business Development April W. Cote Officer Officer Mortgage Loan Officer Stephanie L. Gavidia Florida Kaitlyn K. Murphy Georgia North State Bank Mortgage Customer Service Representative Customer Service Representative Garner Wake Forest Kimberly P. Kasai West Raleigh Dannette Barnes Mortgage Deficiency Specialist Mortgage Loan Processor David N. Crabtree S. Charles Gomes North State Bank Mortgage Susan W. Musgrave North State Bank Mortgage SBA Underwriter Commercial Loan Portfolio Mortgage Operations Mortgage Assistant Fayetteville Tennessee Manager North State Bank Mortgage North Hills Amanda M. Kitts Mortgage Operations Andrea P. Barton Georgia H. Cruthis SBA Servicer Accounting Specialist Mortgage Accounting Specialist Michel M. Hanenberg Tennessee Tara B. Newton Finance North State Bank Mortgage Mortgage Compliance Specialist Mortgage Loan Officer Mortgage Finance North State Bank Mortgage Gail L. Kluever North State Bank Mortgage M. Dion Bennett Mortgage Operations Teller Bank Operations Banker Loan Assistant Carla A. Davis West Raleigh Bank Operations Mortgage Loan Processor Ryan P. Hartman Sabiny O’Rourke North State Bank Mortgage Bank Operations Specialist Brian E. Lawlor Lead Teller Matthew G. Benson Wilmington Bank Operations SBA Business Development North Hills Teller Officer West Raleigh Sharon D. Daye Debra D. Hause Missouri Darisa Paez-Santana Lead Teller Mortgage Marketing Specialist Lead Teller L. Mechelle Berndt Wake Forest North State Bank Mortgage Frank B. Layne Garner Mortgage Loan Officer Assistant Wilmington Senior Leasing Officer North State Bank Mortgage Philip B. Dodge Bank Operations Anita J. Patel Mortgage Operations Courier Michael F. Hawks SBA Specialist Bank Operations Incoming Wire Specialist John G. Lehman Bank Operations Iris G. Best Bank Operations Commercial Loan Portfolio Lockbox Customer Service Maura E. Doyle Manager Christopher J. Patterson Representative Mortgage Assistant Katrina C. Hedrick North Raleigh System Support Specialist Bank Operations North State Bank Mortgage Customer Service Representative Bank Operations Mortgage Operations North Hills

18 Debra S. Peoples Amy L. Smith Rachael G. Williams Loan Operations Specialist Lease Processor Mortgage Closer Bank Operations Greenville North State Bank Mortgage Mortgage Operations Cheryl H. Pettiford Deloris C. Smith Mortgage Servicing Specialist Mortgage Loan Officer Assistant Darla K. Wooten Bank Operations North State Bank Mortgage Customer Service Representative Mortgage Operations Downtown Raleigh Bonnie S. Powell Outgoing Wire Specialist Maria E. Smith Virginia A. Wyatt Bank Operations SBA Specialist Commercial Banking Assistant Bank Operations North Raleigh Manuel A. Prieto Commercial Banking Assistant David L. Smithey Jr. Naomi L. Zimmer Specialized Lending Group Lead Teller Credit Administration Specialist Bank Operations Wilmington Bank Operations

Christina S. Richardson Jessea K. Snider Lockbox Operator Mortgage Loan Officer Assistant Bank Operations North State Bank Mortgage Lexington E. Shane Richardson Mortgage Appraisal Coordinator Tatia B. Springs North State Bank Mortgage Mortgage Closer Mortgage Operations North State Bank Mortgage Lexington Melissa Rideout Lockbox Operator Tabitha M. Staley Bank Operations SBA Funds Control Manager Tennessee Connie L. Rieske Customer Service Representative Timothy E. Stone North Raleigh Human Resources Specialist Human Resources Rebecca N. Robinson Banker Loan Assistant Dawn E. Thompson Bank Operations Mortgage Post-Closing Team Lead Jill M. Ruotolo North State Bank Mortgage Loan Operations Specialist Mortgage Operations Bank Operations Paula V. Tomlinson Christopher R. Salisbury Teller Network Administrator Wake Forest Bank Operations James M. Valley Dwight Scott Mortgage Loan Officer Lead Courier North State Bank Mortgage Bank Operations Downtown Raleigh

Rachel L. Scott Marina D. Vandervort Lead Teller Lead Teller North Raleigh Downtown Raleigh

Susan R. Selwanes Michael A. Vincent Mortgage Closer Banker Loan Assistant Supervisor North State Bank Mortgage Bank Operations Mortgage Operations Cynthia T. Voter Megan Sewell Teller Customer Service Representative Wilmington North Hills Evelyn D. White Vicki G. Simmons Customer Service Representative Mortgage Closer Garner North State Bank Mortgage Wilmington D. Gregory Wilkins Banker Loan Assistant Katherine B. Skaggs Bank Operations Lockbox Supervisor Bank Operations Estelleta F. Williams Mortgage Loan Processor Pamela A. Smallwood North State Bank Mortgage Mortgage Compliance Specialist Mortgage Operations North State Bank Mortgage Mortgage Operations

19 P.O. Box 18367 Raleigh, NC 27619

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