A STRATEGIC PARTNERSHIP
&
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Forward Looking Statements
This presentation contains certain forward-looking information about the little bank, Inc. (“LTLB”) and/or UnionBanc Corp. (“Union”), the holding company for Union Bank & Trust Company. In general, forward-lookingstatements usually use words such as “may,” “believe,” “expect,” “anticipate,” “intend,” “will,” “should,” “plan,”“estimate,” “predict,” “continue” and “potential” or the negative of these terms or other comparable terminology,including statements related to the expected timing of the closing of the merger, the expected returns and otherbenefits of the merger, to shareholders, expected improvement in operating efficiency resulting from the merger,estimated expense reductions resulting from the transactions and the timing of achievement of such reductions, theimpact on diluted earnings per share and tangible book value, and the effect of the merger on LTLB’s capital ratios.Forward-looking statements represent management’s beliefs, based upon information available at the time thestatements are made, with regard to the matters addressed; they are not guarantees of future performance.Forward-looking statements are subject to numerous assumptions, risks and uncertainties that change over timeand could cause actual results or financial condition to differ materially from those expressed in or implied by suchstatements.
Factors that could cause or contribute to such differences include, but are not limited to, the possibility thatexpected benefits may not materialize in the time frames expected or at all, or may be more costly to achieve; thatthe merger may not be timely completed, if at all; that prior to completion of the merger or thereafter, the parties’respective businesses may not perform as expected due to transaction-related uncertainties or other factors; that theparties are unable to implement successful integration strategies; that the required regulatory, shareholder, or otherclosing conditions are not satisfied in a timely manner, or at all; reputational risks and the reaction of the parties’customers to the merger; diversion of management time to merger-related issues; and other factors and riskinfluences. Consequently, no forward-looking statement can be guaranteed. Neither LTLB nor Union undertakesany obligation to update or revise any forward-looking statements, whether as a result of new information, futureevents or otherwise.
Combines two of North Carolina’s top-performing community banks
Expands service in high growth markets (Research Triangle, Greenville, Wilmington)while maintaining small-town banking roots
Pro forma assets of approximately $665 million enhances ability to serve current andlarger customers
Estimated EPS accretion > 20% with full cost savings realized
Maintains “well-capitalized” status and optimizes capital levels
Combined banks uniting under Union Bank brand to reflect regional scope offranchise
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Transaction Overview
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Transaction Rationale
Logical market expansion combines adjacent franchise footprintsaround key Research Triangle and Greenville markets
Pro forma branch network will cover 3 of the top markets inNorth Carolina
Familiar markets and client bases will allow for successfulintegration of compatible cultures
Market Expansion
Immediately accretive to EPS Estimated EPS accretion > 20% with full cost savings realized LTLB TBV earn back period just over 3 years
FinanciallyAttractive
Increases legal lending limit and enhances combined bank’sability to serve larger customers
Reduces impact of fixed regulatory costs on profitability Better positions combined bank for potential future acquisitions
of smaller institutions in current and neighboring markets
Efficiencies from Size and
Scale
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Transaction Terms
Transaction Value1 $30.7 million
Transaction Value per Share $11.94
Exchange Ratio2 0.8843
Consideration mix 100% Stock
Union Pro-Forma Ownership 40.3%
Price/TBV1 126%
Price/Annualized YTD ‘16 EPS1 20.1x
Required Approvals Customary regulatory and shareholder approvals
Expected Closing Q2 2017
Board 11 LTLB /7 Union (reflects pro forma ownership)
LTLB share price of $13.50 used for transaction value and pricing ratios1) Includes the cash out of options2) 0.8843 share of LTLB common stock for each share of Union Banc Corp. common stock
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Transaction Assumptions
Cost Savings $2.3 million with full cost saves realized
Revenue Synergies None assumed
One-Time Costs $4.0 million, pretax
Core Deposit Intangible $1.9 million
Fair Value Marks $4.9 million pre-tax credit mark gross of loan loss reserve$1.7 million mark on carrying value of bank premises
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Pro Forma Bank Overview
15 branches across the Research Triangle and eastern North Carolina
Balance Sheet (Pro forma as of 9/30/16*)
Assets: $665 million
Loans: $480 million
Deposits: $550 million
the little bank, Inc.
Union Bank & Trust Company
* Excludes merger accounting adjustmentsCircle denotes pending branch location
Source: S&P Global Market Intelligence
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Pro Forma Deposit & Loan Portfolios
Const.$33,344
13%
1-4$69,869
28%
Owner CRE$48,906
20%
Other CRE$48,151
19%
C&I$21,069
8%
Other$28,769
12%
Const.$35,437
15%
1-4$85,798
37%Owner CRE
$36,562 16%
Other CRE$27,203
12%
C&I$28,295
12%
Other$19,362
8%
Const.$68,781
14%
1-4$155,667
32%Owner CRE
$85,468 18%
Other CRE$75,354
16%
C&I$49,364
10%
Other$48,131
10%
Dollars in ThousandsSource: S&P Global Market Intelligence
Union Bank & Trust Companythe little bank, Inc. Combined
Demand$80,106
27%
Transaction$45,780
15%MMDA & Savings$63,442
21%
Retail CD$97,238
33%
Jumbo CD$12,679
4%
Demand$52,016
21%
Transaction$47,776
19%MMDA & Savings$62,843
25%
Retail CD$78,526
31%
Jumbo CD$10,584
4%
Demand$132,122
24%
Transaction$93,556
17%MMDA & Savings$126,285
23%
Retail CD$175,764
32%
Jumbo CD$23,263
4%
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Key Metrics
Union Bank & Trust Company founded in Oxford, NC in 2006
7 branches and an LPO (Raleigh)
Bank-level Leverage Ratio above 10%
Loans/Deposits above 90%
Cost of Funds below 50bps
LTLB founded in Kinston, NC in 1998
7 branches
Leverage Ratio and TCE Ratio both above 10%
Q3 2016 ROAA of 1.00%
NPAs/Assets below 0.45%
Source: S&P Global Market Intelligence
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Union Bank & Trust Company – Overview
NPAs/Assets
NPAs ex. TDRs/Assets
2.39%2.26%
1.73%
1.55%
1.35%
0.97%
1.31%
1.42%
1.18% 1.16%
0.50%
0.70%
0.90%
1.10%
1.30%
1.50%
1.70%
1.90%
2.10%
2.30%
2.50%
2012Y 2013Y 2014Y 2015Y LTM
Asset Quality Trends
Source: S&P Global Market Intelligence
(Dollars in Thousands)
Balance Sheet Highlights 2012Y 2013Y 2014Y 2015Y 9/30/16
Total Assets 203,296 232,736 241,105 265,340 299,480
Net Loans 167,915 186,184 197,316 210,616 229,980
Total Deposits (Incl. Dom. & For.) 172,290 202,289 202,792 222,072 251,745
Tangible Common Equity 18,137 19,559 21,444 22,780 24,219
Performance Measures 2012Y 2013Y 2014Y 2015Y LTM
Net Income 1,764 1,776 1,620 1,261 1,463
ROAA (%) 0.89 0.82 0.69 0.49 0.52
ROAE (%) 7.52 7.12 5.97 4.39 4.90
Net Interest Margin (%) 4.60 5.02 5.14 4.91 4.70
Efficiency Ratio (FTE) (%) 68.80 70.59 73.72 77.47 74.77
Capitalization (%) 2012Y 2013Y 2014Y 2015Y 9/30/16
TCE Ratio 8.92 8.42 8.91 8.60 8.10
Leverage Ratio 11.79 11.29 11.41 10.95 10.26
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the little bank, Inc. – Overview
0.60%
0.36%0.39%
0.31%0.29%
0.60%
0.36%0.39%
0.31%0.29%
0.00%
0.10%
0.20%
0.30%
0.40%
0.50%
0.60%
0.70%
2012Y 2013Y 2014Y 2015Y LTM
Asset Quality Trends
NPAs/Assets
NPAs ex. TDRs/Assets
Source: S&P Global Market Intelligence
(Dollars in Thousands)
Balance Sheet Highlights 2012Y 2013Y 2014Y 2015Y 9/30/16
Total Assets 306,045 311,952 339,215 362,331 366,543
Net Loans 210,655 218,980 242,459 239,020 246,601
Total Deposits (Incl. Dom. & For.) 250,225 261,462 277,467 297,754 299,245
Tangible Common Equity 28,963 29,728 32,534 34,655 37,317
Performance Measures 2012Y 2013Y 2014Y 2015Y LTM
Net Income 2,468 2,788 2,925 3,122 3,267
ROAA (%) 0.80 0.91 0.88 0.89 0.90
ROAE (%) 6.98 9.19 9.37 9.25 9.16
Net Interest Margin (%) 3.58 3.50 3.61 3.48 3.45
Efficiency Ratio (FTE) (%) 61.20 64.08 63.34 64.69 64.58
Capitalization (%) 2012Y 2013Y 2014Y 2015Y 9/30/16
TCE Ratio 9.46 9.53 9.59 9.56 10.18
Leverage Ratio 10.11 9.71 9.58 9.48 10.03
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Market Highlights – Research Triangle
Overview Demographic Highlights
The Research Triangle is the second largest metro area in the state behind Charlotte
Home to 2.1 million residents and 15 universities
The region attracts more than $2.5 billion of federal R&D funding each year
RDU airport services 400 daily flights to 40 nonstop destinations
In 2016, US News ranked the Research Triangle as the fourth best place to live in the United States
Sources: S&P Global Market Intelligence, researchtriangle.org, workinthetriangle.com
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9.00%
$0
$10,000
$20,000
$30,000
$40,000
$50,000
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$80,000
Raleigh MSA Charlotte MSA Greensboro-HP MSA
2022 Proj. Median HH Income ($)
Projected 5-Year Population Growth (%)
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Market Highlights – Greenville, NC
Overview Demographic Highlights
2nd largest city east of I-95 in North Carolina
Home to East Carolina University; the 3rd
largest university in the state
Leading retail center in eastern North Carolina and one of only a dozen billion dollar retail markets in the state
Sources: S&P Global Market Intelligence, greenvillenc.org
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3.50%
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6.50%
$0
$10,000
$20,000
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$50,000
$60,000
Greenville, NC High Point, NC Asheville, NC State of NC
Projected 5-Year Housing Unit Growth (%)
Projected 5-Year Population Growth (%)
2022 Proj. Median HH Income ($)
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Market Highlights – Wilmington, NC
Overview Demographic Highlights
Largest city east of I-95 in North Carolina
High concentration of small to mid-size businesses
Home to UNC-Wilmington and location of large offices for General Electric, Verizon Wireless and Duke Energy
Sources: S&P Global Market Intelligence, wilmingtonchamber.org
3.00%
3.50%
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5.00%
5.50%
6.00%
6.50%
7.00%
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
Wilmington, NC High Point, NC Asheville, NC State of NC
Projected 5-Year Housing Unit Growth (%)
Projected 5-Year Population Growth (%)
2022 Proj. Median HH Income ($)
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Investor Contacts
Vincent Robert “Rob” JonesPresident & Chief Executive Officer
Doyle M. ThigpenExecutive Vice President & Chief Financial Officer
the little bank, Inc.804 Carey Road
Kinston, NC 28501(252) 317-2804
www.thelittlebank.com
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Additional Information
This presentation is being made with respect of the proposed merger involving LTLB and Union. Thispresentation is not a solicitation of any vote or approval of the LTLB or Union shareholders and is not asubstitute for the joint proxy statement/offering circular or any other documents which LTLB and Unionmay send to their respective shareholders in connection with the proposed merger. This presentation doesnot constitute an offer to sell or the solicitation of an offer to buy any securities to be issued in connectionwith the proposed merger. Offers to buy such securities will be solicited only by and pursuant to the terms,conditions and disclosures contained in the joint proxy statement/offering circular. The securities to beissued in the proposed merger are not savings or deposit accounts and are not insured or otherwiseapproved by the Federal Deposit Insurance Corporation or any other federal or state governmental agency.
In connection with the proposed merger, LTLB and Union will send a joint proxy statement of LTLB andUnion and an offering circular of LTLB, as well as other relevant documents concerning the proposedmerger to their respective shareholders. BEFORE MAKING ANY VOTING OR INVESTMENT DECISIONS,INVESTORS AND SHAREHOLDERS OF LTLB AND UNION ARE URGED TO CAREFULLY READ THEENTIRE JOINT PROXY STATEMENT/OFFERING CIRCULAR REGARDING THE PROPOSED MERGERWHEN IT BECOMES AVAILABLE, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSEDOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THEPROPOSED MERGER. Investors and security holders may obtain a free copy of the joint proxystatement/offering circular (when available) at LTLB’s website at www.thelittlebank.com, or at Union’swebsite at www.unionbanknc.com.