TowneBank Preferred Stock Offering Tops $59 Million

SUFFOLK, Va., Aug. 27, 2008 (GLOBE NEWSWIRE) -- TowneBank (Nasdaq: TOWN)
announced today that it has raised $59.8 million in additional capital through
the sale of more than 598,000 shares of its 8% Non-Cumulative Convertible
Preferred Stock, Series A, well above the original maximum offering amount of
$30 million. The bank also announced that the Board of Directors approved a
conversion price for the preferred stock of $18.56, the closing price of the
common stock on Tuesday, August 26, 2008. This conversion price equals 5.388
shares of common stock for each share of preferred stock. Since the offering was
over-subscribed by the bank's shareholders and members, it was not made
available to the general public.

G. Robert Aston, Jr., Chairman and Chief Executive Officer of TowneBank,
commented, "We deeply appreciate the tremendous support shown by our
shareholders and members through their participation in this offering. Their
loyalty and support continues to provide the foundation for our growth and
success."

The preferred stock will pay a non-cumulative dividend of 8% per year. Dividends
are payable quarterly in cash, when, as and if declared by the Board of
Directors, on the first day of March, June, September and December, commencing
on December 1, 2008. Dividends on the preferred stock will begin to accrue from
August 15, 2008.

On or after September 1, 2011, if the closing price of Towne common stock
exceeds 120% of the conversion price for 20 trading days during any consecutive
30 day trading period, including the last day of the period, Towne may, at its
option, cause some or all of the outstanding shares of the preferred stock to be
automatically converted into its common stock. On September 1, 2013, all of the
then outstanding shares of preferred stock will automatically convert into
common shares without regard to the then market price of the common stock.

As one of Virginia's top community banks, TowneBank now operates 17 banking
offices in Chesapeake, Hampton, Portsmouth, Newport News, Virginia Beach,
Norfolk, Williamsburg and York County. Towne also offers a full range of
financial services through its controlled divisions and subsidiaries that
include Towne Investment Group, Towne Insurance Agency, TFA Benefits, TowneBank
Mortgage, TowneBank Commercial Mortgage, GSH Real Estate Corporation, Corolla
Classic Vacations and Corolla Real Estate. Through its strategic partnership
with William E. Wood and Associates and Prudential McCardle, the bank also
offers mortgage services in all of the offices of both companies in Hampton
Roads and Northeastern North Carolina. Local decision-making is a hallmark of
its hometown banking strategy that is delivered through the leadership of each
group's President and Board of Directors. With total assets of $2.72 billion as
of June 30, 2008, TowneBank is the largest bank headquartered in Hampton Roads.

Forward-Looking Statements:

This release contains forward-looking statements as defined by the Private
Securities Litigation Reform Act of 1995. These statements may address issues
that involve significant risks, uncertainties, estimates and assumptions made by
management. Facts that may cause actual results to differ materially from those
contemplated by such forward-looking statements include competitive pressures in
the banking industry that may increase significantly; changes in the interest
rate environment may reduce margins and/or the volumes and values of loans made
or held as well as the value of other financial assets held; general economic
conditions, either nationally or regionally, may be less favorable than
expected, resulting in, among other things, deterioration in credit quality
and/or a reduced demand for credit or other service; changes in the legislative
or regulatory environment, including changes in accounting standards, may
adversely affect our business; costs or difficulties related to the integration
of the business and the businesses we have acquired may be greater than
expected; expected cost savings associated with pending or recently completed
acquisitions may not be fully realized or realized within the expected time
frame; our competitors may have greater financial resources and develop products
that enable them to compete more successfully; changes in business conditions,
changes in the securities market and changes in our local economy with regard to
our market area and its heavy concentration of U. S. military bases and related
personnel. We assume no obligation to update information contained in this
release.

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CONTACT: TowneBank
G. Robert Aston, Chairman and CEO
757-638-6780
Clyde E. McFarland, Jr., Senior Executive Vice President and CFO
757-638-6801