[PHOTO OF TRIANGLE BANK LOGO APPEARS HERE]

PERFORMANCE, LOCATION, SERVICE

Triangle Bancorp, Inc.
1998 Annual Report

[BAR CHART APPEARS BELOW WITH THE FOLLOWING PLOT POINTS:]

1994 1995 1996 1997 1998
---- ---- ---- ---- ----
$1.2 $1.4 $1.6 $2.0 $2.1

TOTAL ASSETS
(in billions)

COMPOUNDED ANNUAL GROWTH RATE:
15.47%

Triangle Bancorp, Inc.

[BAR CHART APPEARS BELOW WITH THE FOLLOWING PLOT POINTS:]

1994 1995 1996 1997 1998
---- ---- ---- ---- ----
Actual $7.2 $12.5 $14.8 $19.5 $21.9
Without nonrecurring $7.8 $14.2 $15.6 $19.9 $24.5

NET INCOME
(in millions)

COMPOUNDED ANNUAL GROWTH RATE:
32.08% (actual)

SELECTED CONSOLIDATED FINANCIAL INFORMATION

1998 1997 1996 1995 1994
---- ---- ---- ---- ----

SUMMARY OF OPERATIONS
(IN THOUSANDS)
Net interest income $ 74,630 $ 68,390 $ 58,058 $ 50,423 $ 43,619
Provision for loan losses 5,115 5,121 2,515 31 1,008
Noninterest income 18,456 16,922 12,969 11,656 9,383
Noninterest expense 54,896 50,125 44,876 43,072 41,071
Provision for income taxes 11,217 10,540 8,840 6,460 3,740
Net income $ 21,858 $ 19,526 $ 14,796 $ 12,516 $ 7,183

PER SHARE DATA (1)
Basic earnings per share $ 0.87 $ 0.79 $ 0.62 $ 0.52 $ 0.31
Diluted earnings per share 0.84 0.76 0.60 0.51 0.30
Closing share price 15.81 23.59 10.92 9.50 6.67
Book value 6.47 6.14 5.66 5.30 4.61
Cash dividends 0.32 0.25 0.18 0.11 0.05

SELECTED RATIOS
Return on average assets 1.09% 1.11% 0.97% 0.99% 0.63%
Return on average equity 13.69% 13.38% 11.30% 10.58% 6.64%
Shareholders' equity to total assets 7.68% 7.56% 8.53% 9.19% 9.12%

AT PERIOD END (IN THOUSANDS)
Loans, net $1,363,553 $1,273,139 $1,006,287 $ 839,660 $ 690,747
Securities available for sale 482,155 446,363 328,008 280,835 190,036
Securities held to maturity 81,138 100,666 104,873 97,409 183,792
Total assets 2,123,084 2,015,637 1,598,753 1,384,135 1,194,286
Total deposits 1,625,898 1,550,240 1,344,803 1,137,847 1,000,472
Advances from the FHLB 130,300 205,300 59,800 59,500 40,500
Corporation-obligated mandatorily
redeemable capital securities 19,952 19,951 -- -- --
Shareholders' equity 163,027 152,471 136,403 127,259 108,874

AVERAGE BALANCES (IN THOUSANDS)
Loans, net $1,303,000 $1,155,562 $ 938,224 $ 768,638 $ 654,670
Total assets 2,009,754 1,758,148 1,528,728 1,263,337 1,136,049
Total demand deposits 200,135 169,220 149,022 132,235 108,546
Total interest bearing deposits 1,382,982 1,270,693 1,120,851 937,471 853,042
Other borrowings 215,985 130,199 103,093 73,512 45,549
Corporation-obligated mandatorily
redeemable capital securities 19,952 11,588 -- -- --
Shareholders' equity 159,621 145,950 130,939 118,272 108,226

(1) The per share information presented has been adjusted to give effect to a
three-for-two stock split effected in the form of a 50% stock dividend which was
paid on June 30, 1998 to shareholders of record on June 15, 1998.

Triangle Bancorp, Inc. and Subsidiaries

[PHOTO OF MICHAEL S. PATTERSON APPEARS HERE]

"AS WE LOOK TO THE FUTURE, WE ARE EXCITED ABOUT THE PROSPECTS FOR
CONTINUED SUPERIOR PERFORMANCE."

MICHAEL S. PATTERSON CHAIRMAN, PRESIDENT AND CEO TRIANGLE BANCORP, INC.

[BAR CHART APPEARS BELOW WITH THE FOLLOWING PLOT POINTS:]

1994 1995 1996 1997 1998
---- ---- ---- ---- ----
Actual $0.30 $0.51 $0.60 $0.76 $0.84
Without nonrecurring $0.33 $0.58 $0.63 $0.78 $0.95

DILUTED EARNINGS PER SHARE

Compounded Annual Growth Rate:
29.30% (actual)

TO OUR SHAREHOLDERS

It is a pleasure to present the 1998 operating results for Triangle Bancorp
("Triangle"). It was a year in which we continued to produce excellent financial
results, while successfully integrating two strategic acquisitions that
solidified our position as the eighth largest bank holding company in North
Carolina. Triangle now serves forty-six North Carolina communities with
seventy-two banking offices from Charlotte in the west to Morehead City in the
east.
For the year ended 1998, we reported record recurring earnings of $24.5
million compared to $19.9 million in 1997, an increase of 23%. Diluted recurring
earnings per share for the year were $.95 compared to $.78 for the same period
in 1997, an increase of 22%. Return on average assets and return on average
shareholders' equity for the year, without nonrecurring items, were 1.22% and
15.36% respectively, compared to 1.13% and 13.66% for 1997. Nonrecurring items
in 1998 included merger expenses related to the acquisitions of Guaranty State
Bank and United Federal Savings Bank ("United Federal"). For 1997, nonrecurring
items represented merger-related expenses and a one-time gain on the sale of
branch offices.
Including nonrecurring items, we reported net income of $21.9 million in
1998 compared to $19.5 million for 1997, an increase of 12%. Diluted earnings
per share increased by 11% to $.84 from $.76. Return on average assets and
return on average shareholders' equity for 1998 were 1.09% and 13.69%
respectively, compared to 1.11% and 13.38% for 1997.
Following a year of dramatic growth in 1997, Triangle's stock price
experienced a decline in 1998. However, for the 24 months ended December 31,
1998, the price of our stock increased 45%. The compounded growth rate for a
share of Triangle Bancorp stock over the five years ended December 31, 1998 was
26%, resulting in a total return during this period of 222%. During 1998, the
board of directors increased the annual cash dividend declared to $.35 per share
from $.30 per share in 1997, an increase of 17%. We paid out $8.3 million in
cash dividends or 34% of recurring net income to our shareholders in 1998,
compared to $6.2 million or 31% of recurring net income in 1997. On June 30,
1998, we issued a 50% stock dividend to share holders of record as of June 15,
1998, resulting in approximately 7.2 million additional shares being issued. At
year end December 31, 1998, the Company had approximately 25.2 million shares
outstanding.
During 1998, we completed two strategic acquisitions which added
approximately $400 million in assets to our Company. As a result of these
acquisitions and internal growth, we reported total assets of $2.1 billion at
year-end, compared to $1.6 billion at year-end 1997 on an "as reported" basis.
In April, the acquisition of Guaranty State Bank in Durham added approximately
$100 million in assets and $89 million in deposits. In Durham County, it
elevated Triangle Bank from 18th to 6th in deposit market share and increased
our number of banking

Triangle Bancorp, Inc. and Subsidiaries

offices from one to five. In September, we acquired Rocky Mount-based United
Federal with thirteen offices, approximately $300 million in assets, and a total
of $226 million in deposits. From this transaction, in the Rocky
Mount/Nash/Edgecombe County Metropolitan Statistical Area (MSA), we added $113
million in deposits and improved our market share to 16.4% from 8.6%. Overall,
these two transactions allowed us to increase our percentage of total deposits
in MSAs from 69% to 72% based on June 30, 1997 data.
Other initiatives undertaken in 1998 to position Triangle for continued
growth included a new 20,000 square foot operations and data processing center,
allowing us to more effectively serve our rapidly expanding customer base.
During the second quarter, we completed the installation of a new mainframe
computer system that will enable us to double our size without incurring a major
expenditure for the expansion of computing capacity.
Our customers have a broad range of choices with regards to where they
go for financial services, and we must continue to earn their business every
day. To do this, we must have well-trained and motivated associates who deliver
quality products and services. In 1998, we expanded training programs as part of
our efforts to continually improve our associates' ability to deliver the
highest possible level of service. Over 260 associates were trained in the
consultative sales process to ensure our customers are offered the opportunity
to take advantage of all the products and services we offer. An internal
commercial loan officer development program was implemented, ensuring "added
value" is something our commercial customers will always receive.
As we look to the future, we are fully aware of the vast changes taking
place in the financial services industry. We are confident a solid platform has
been established on which to build our future. Business customers have access to
PC banking, and we will introduce a new online banking product that will be
accessed through our site on the World Wide Web for both retail and commercial
customers in 1999. Through our subsidiary, Triangle Investment Services, our
customers have the ability to purchase stocks, mutual funds, bonds and
annuities. Our government lending division, which specializes in assisting small
business customers with government guaranteed loan programs, continues to
experience exceptional growth. We were the number one originator of Small
Business Administration (SBA) loans among all North Carolina banks in terms of
dollars loaned, and number two in total loans made for the SBA fiscal year ended
June 30, 1998. Our goal is to be number one in both categories. Coastal Leasing,
our wholly-owned subsidiary, which was acquired in October 1997, performed well
in 1998. The integration of its services into our company and the synergy this
line of business has for small business customers has proven to be successful.
During 1998, we increased recurring noninterest income by 24% to $18.5
million from $14.9 million. This income component, which represented 20% of our
total revenue in 1998 compared to 18% just two years ago, is a major area of
focus. Our goal is to increase noninterest income to 25% of total revenue over
the next two years. In addition to areas already mentioned, a major component of
noninterest income growth is projected to come from

Triangle Bancorp, Inc. and Subsidiaries

[PHOTO APPEARS ON TOP RIGHT SIDE OF PAGE:]

EXECUTIVE MANAGEMENT

Left to right: Steven R. Ogburn,
Edward O. Wessell, Debra L. Lee
and Robert E. Branch

residential mortgage lending, as a result of the expertise we acquired in the
United Federal acquisition. This line of business has excellent noninterest
income growth potential for a Company our size, and we believe it will be a
significant contributor to our revenue growth in the future.
We have reached a critical mass, giving us the ability to achieve
substantive asset growth internally without being as dependent on bank
acquisitions for asset growth or financial performance. However, this does not
mean we will not seek new opportunities to grow and diversify the Company. We
will examine the potential for adding synergistic lines of business during 1999,
which will allow us to increase noninterest income while providing new financial
services for customers. We will continue to look for strategic community bank
acquisitions in markets which offer superior growth opportunities. However, our
primary focus in 1999 will be to grow internally. We believe there is a great
opportunity to improve our earnings by increasing the number of products and
services our current customers utilize. Our associates are better trained than
ever and will be focused on providing the highest quality service and products
to our customers. This is still a "people business." We are confident this
approach of becoming better at what we do and how we do it will translate into
more growth, more profit and therefore enhanced shareholder value.
We are gratified by the results we have achieved for our shareholders,
our customers, and our associates as we begin our second decade of service. It
is with deep appreciation that I thank our associates for their outstanding
contributions which have allowed us to position ourselves so well for the
future. I would like to thank our directors for their diligent work and offer a
special word of gratitude to three members who retired in 1998. Syd W. Dunn of
Greenville and J.L. Maxwell Jr. of Goldsboro served our company with distinction
since December 1993, when they joined our board as part of the New East Bancorp
acquisition. Cy N. Bahakel of Charlotte joined Triangle's board in October 1997
as a result of the acquisition of Bank of Mecklenburg, where he served as
chairman of the board. Their advice and counsel will be missed. We hope you will
join us for our annual shareholders meeting to be held at the North Raleigh
Hilton on Tuesday, April 27, 1999. And, as always, we welcome any comments you
may have concerning the performance of the Company.

Sincerely,

/s/ Michael S. Patterson
Michael S. Patterson
Chairman, President and CEO

Triangle Bancorp, Inc. and Subsidiaries

[BAR CHART APPEARS BELOW WITH THE FOLLOWING PLOT POINTS:]

1994 1995 1996 1997 1998
---- ---- ---- ---- ----
Actual $0.63 $0.99 $0.97 $1.11 $1.09
Without nonrecurring $0.68 $1.12 $1.02 $1.13 $1.22

RETURN ON AVERAGE ASSETS

"TRIANGLE BANK HAS POSITIONED ITSELF THROUGH INTERNAL AND EXTERNAL GROWTH
TO BE THE PREMIER COMMUNITY BANK IN CENTRAL NORTH CAROLINA."

CARY A. MORRIS; VERNON C. PLACK, CFA; HOLLY M. CLARK
SCOTT & STRINGFELLOW, INC. OCTOBER, 1998

[BAR CHART APPEARS BELOW WITH THE FOLLOWING PLOT POINTS:]

1994 1995 1996 1997 1998
---- ---- ---- ---- ----
Actual $6.6 $10.6 $11.3 $13.4 $13.7
Without nonrecurring $7.2 $12.0 $11.9 $13.7 $15.4

RETURN ON AVERAGE EQUITY

A FRANCHISE THAT KEEPS DELIVERING

Performance, location, and service. These are critical elements of success as
the nation's financial services companies confront challenges presented by one
of the most profound periods of change in the history of the industry. The
winners will be those that perform superbly, are strategically located, and have
the mix of products and services that businesses and consumers require.
Just over a decade ago, Triangle Bank was little more than an idea in
the minds of a group of forward-thinking business people. Today, Triangle
Bancorp and its Triangle Bank, Bank of Mecklenburg, and Coastal Leasing
subsidiaries constitute a highly valued and respected financial services
franchise. The company's success in fostering healthy internal growth while
simultaneously implementing an aggressive strategy of acquisitions and product
diversification places the franchise on solid footing to continue delivering
superb rewards for customers, shareholders, and employees.
Challenges confront Triangle and the entire industry. But for those
companies that are ready, these challenges represent opportunities: Customers,
whether commercial or retail, are looking for a single stop for all of their
financial needs. Market forces are putting pressure on areas of profitability
that once were a given in banking, and management must find new ways to maintain
revenue growth. Stern competition requires that all employees adapt to a new
culture in which they better understand their customers' financial needs and
fulfill them. Technology is advancing rapidly, and companies must fulfill
ever-changing customer demands for new products, as well as for new service
delivery channels. Analysts and investors, in the wake of a period of intense
merger activity throughout the financial services industry, are looking
increasingly at a company's ability to grow its existing franchise while at the
same time achieving superior earnings per share growth.
Triangle Bancorp ("Triangle") is ready to embrace these challenges and
turn them into opportunities. The company is competing successfully against
financial institutions of all sizes. And people are noticing. The financial
community judges Triangle Bancorp a superb performer in one of the nation's most
vibrant growth markets at a time of great opportunity.
In other words: Performance, location, and service.

The Triangle franchise is solid, and it's ready for new
opportunities.

Triangle Bancorp, Inc. and Subsidiaries

[BAR CHART APPEARS BELOW WITH THE FOLLOWING PLOT POINTS:]

1994 1995 1996 1997 1998
---- ---- ---- ---- ----
Noninterest Income $44 $50 $58 $68 $75
Net Interest Income $ 9 $12 $12 $15 $18

REVENUE GROWTH
(in millions, without nonrecurring items)

COMPOUNDED ANNUAL GROWTH RATES:
NONINTEREST: 18%; NET INTEREST: 14%
COMBINED: 15%

"TRIANGLE IS MORE THAN JUST A CONSOLIDATOR - THEY HAVEN'T LET DEALS DISTRACT
THEM FROM FUNDAMENTAL PERFORMANCE."

R. HAROLD SCHROEDER, PETER KUPER KEEFE, BRUYETTE & WOODS, INC. OCTOBER, 1998

[BAR CHART APPEARS BELOW WITH THE FOLLOWING PLOT POINTS:]

1994 1995 1996 1997 1998
---- ---- ---- ---- ----
Actual $77.5 $69.4 $63.2 $58.8 $59.0
Without nonrecurring $75.8 $65.2 $61.1 $57.0 $54.3

EFFICIENCY RATIO

PERFORMANCE

Proving That Performance Counts

Triangle's growth has been dramatic. The company was launched as a
state-chartered community bank in 1988 and grew to $129 million in assets at the
end of 1991. Beginning with the 1991 merger of Enterprise Bank, Triangle has
acquired 10 banks, 17 branches of competing companies, and a full-service
leasing concern, and expanded its asset base to $2.1 billion. Now the eighth
largest banking firm in one of the nation's most competitive banking states,
Triangle has become, in the words of one financial analyst, "big enough to
appear on the radar screen." More to the point, Triangle is achieving its
mission of building a superior super-community bank that delivers excellent
customer service while optimizing shareholder value.
The proof is in the performance, as measured by key financial
indicators. From 1994 through the end of 1998, Triangle's earnings per share
have grown at a compounded annual rate of 29%; net income has grown by 32%; and
dividends paid to Triangle Bancorp shareholders have grown at a compounded
annual rate of 63%. Indicators of quality performance have attracted the
attention of the analyst community: Net charge-offs to loans improved to 0.25%
in 1998 compared to 0.29% in 1997, while the ratio of loan loss reserves to
total loans increased to 1.42% compared to 1.38% at the same time one year ago.
This illustrates that Triangle's managers and associates have not taken
their eyes off the importance of fundamentally sound performance -- in other
words, keen attention to growing revenues through quality lending and fee
generation while holding expenses in check. As one analyst put it, "Triangle has
maintained its focus on successfully integrating ... companies without losing
sight of earnings or asset quality." In fact, 21% of the company's growth over
the past four years has been internal -- an important factor to keep in mind
when judging future performance. For the year 1998, Triangle grew interest
income by 11% and noninterest income by 24% while delivering an efficiency ratio
of 54%, based on recurring earnings, compared to 60.4% on average recorded by
peer banks.
The company's lending portfolio has grown at a 19% compounded annual
rate between 1994 and 1998. Again, the proof is in the performance: Noninterest
income for the Government Guaranteed Lending Department more than doubled in
1998. Triangle expanded this service in 1998 by opening an office in South
Carolina, and a new office will open in Virginia this year. Since its
acquisition in late 1997, the company's Coastal Leasing subsidiary has doubled
its assets from $14 million to $28 million at the end of 1998.
Growth of such internal capabilities begets other positive indicators of
performance: The company's noninterest income has grown at a rate of 18%
annually from 1994 through 1998 and now represents 20% of Triangle's total
revenues.

Triangle Bancorp, Inc. and Subsidiaries

[PIE CHART APPEARS BELOW WITH THE FOLLOWING PLOT POINTS:]

MSAs - 72%

TOTAL DEPOSITS

Of the Total Deposits held by Triangle Bank and Bank of Mecklenburg, 72% are in
metropolitan statistical areas (MSAs). MSAs are urbanized areas, cities with
50,000 people or more or a total metropolitan population of 100,000 or more, as
identified by the U.S. Office of Management and Budget.

"THIS IS A CONSERVATIVE MANAGEMENT TEAM THAT IS OPERATING
IN VIBRANT MARKETS IN NORTH CAROLINA."

EDWARD R. NAJARIAN, KENNETH B. LEVY WHEAT FIRST UNION OCTOBER, 1998

[MAP OF NORTH CAROLINA APPEARS HERE DEPICTING BANKING CENTER LOCATIONS.]

Triangle Bank: 69 offices Bank of Mecklenburg: 3 offices

BANKING CENTER LOCATIONS

LOCATION

THE RIGHT PLACE AT THE RIGHT TIME

Triangle has focused on building its franchise in local areas that have growth
opportunities and strong economies, and the company's footprint is now firmly
planted in one of the most vibrant states in the nation for economic
development. North Carolina grew at a rate of 12% from 1990 to 1997, and current
estimates project an 8% rate of population growth and continued economic
expansion through 2002. Already the South's third-most populous state, North
Carolina is a superb location to be doing business -- and Triangle Bancorp has
established its strength in some of the state's most appealing regions.
The company has a strong presence throughout eastern North Carolina with
impressive market shares of 12% in Rocky Mount, 7.1% in Goldsboro, and 6.1% in
Greenville. Triangle's footprint in Rocky Mount is particularly significant. A
total of 2% of the state's population resides in the Rocky Mount market.
Triangle is second in market share in Rocky Mount, and the next closest banking
competitor has less than half of Triangle's share.
The company's 72 banking offices and three leasing offices are
distributed throughout metropolitan and rural areas. But 72% of deposits are
concentrated in metropolitan statistical areas (MSAs), including the
strategically important Bank of Mecklenburg presence in the dynamic Charlotte
market. This is significant for future growth since commercial activity tends to
be greater in MSAs. The rural operations are strategically important in that
they produce a higher percentage of noninterest-bearing deposits that help the
company reduce its funding cost.

Triangle Bancorp, Inc. and Subsidiaries

[PHOTOGRAPH OF TRIANGLE BANK'S WEBSITE APPEARS HERE]

"WE BELIEVE THAT THE ACQUISITION STRATEGY FOLLOWED BY TRIANGLE IS BENEFICIAL TO
SHAREHOLDERS AND PROVIDES THE LOCAL COMMUNITIES THE BEST OF BOTH WORLDS:
PERSONAL SERVICE TYPICAL OF COMMUNITY BANKS AND PRODUCTS AND SERVICES COMPARABLE
TO LARGER REGIONAL BANKS."

CARY A. MORRIS; VERNON C. PLACK, CFA; HOLLY M. CLARK
SCOTT & STRINGFELLOW, INC. OCTOBER, 1998

[PHOTOGRAPH OF INKPEN WITH TRIANGLE BANK'S LOGO APPEARS HERE]

SERVICE

FULFILLING THE NEEDS OF CUSTOMERS

Businesses and retail consumers in all of the communities served by Triangle
are, in growing numbers, learning the company can deliver on its mission of
providing personalized service typical of community banks and products and
services comparable to larger banks.
Throughout Triangle's service area, from Raleigh to Rocky Mount... from
Wilson to Wilmington... from Durham to Dunn... and beyond, business and retail
customers are increasingly choosing Triangle for all of their financial needs.
Small businesses of all descriptions, from retail stores to motels to
restaurants to industrial plants, are coming to Triangle for their banking
needs. The Small Business Administration (SBA) has recognized Triangle as a
Preferred Lender, which allows the company to approve transactions without
sending loan packages to the SBA for approval. Triangle delivered by approving
$12 million worth of SBA-backed loans during 1998. Triangle helps in rural areas
with the U.S. Department of Agriculture's Business and Industry (B&I) lending
program. Triangle approved $6 million worth of B&I loans during 1998. The $18
million in total loan production was triple the $5 million loaned in 1997, and
the goal for 1999 is $30 million.
Some business owners may prefer the option of leasing, and Triangle is
ready to deliver through its Coastal Leasing subsidiary. Business customers
often find that leasing is an attractive alternative to purchasing such items as
computer or telephone equipment, new machinery, and even furniture because of
tax advantages and the fact that a down payment is not required. Coastal Leasing
is headquartered in Greenville, NC and has offices in Wilmington, Charlotte,
Raleigh, Greenville, and Tidewater Virginia.
Business customers can go to any Triangle branch to access the company's
small business lending programs and the leasing services offered by Coastal.
And, they can always choose from a wide array of checking and investment
accounts, in addition to cash management services.
Retail customers almost can design their checking and savings plans.
Options vary from high balance/high interest rate relationship accounts to low
service charge selections. Whether they're looking for safety, liquidity, a
long-term investment, or a good return on their funds, customers can be served
at Triangle. And, with the expertise brought on board in the United Federal
acquisition in 1998, Triangle has strengthened its capabilities in mortgage loan
origination and servicing. In 1999, among other plans in the works, Triangle
will begin offering online banking services to retail customers.
Finally, investors need look no further than the brokers and financial
advisors at Triangle Investment Services, which offers full securities services
including stocks, bonds, mutual funds, and annuities.

WITH A SALES FORCE "READY TO DELIVER," CUSTOMERS' FINANCIAL NEEDS ARE MET AT
TRIANGLE.

Triangle Bancorp, Inc. and Subsidiaries

[BAR CHART APPEARS BELOW WITH THE FOLLOWING PLOT POINTS:]

1994 1995 1996 1997 1998
---- ---- ---- ---- ----
$0.3 $1.8 $3.3 $5.0 $7.6

Per Share: $.05 .13 .22 .30 .35

DIVIDENDS PAID TO
TRIANGLE SHAREHOLDERS

(in millions, declared by Triangle without affect to acquired entities)

"WE BELIEVE TRIANGLE'S STOCK HAS UPSIDE POTENTIAL.
WE REITERATE OUR LONG-TERM BUY RATING."

JOHN B. MOORE, JR., MARGUERITE S. BAUDOIN

INTERSTATE/JOHNSON LANE JANUARY, 1999

1994 1995 1996 1997 1998
---- ---- ---- ---- ----
$6.67 $9.50 $10.92 $23.59 $15.81

YEAR END STOCK PRICE

COMPOUNDED ANNUAL GROWTH RATE:

24.10%

READY FOR NEW OPPORTUNITIES

Triangle Bancorp enters this period of enormous change in banking fully equipped
to meet the challenges brought on by the company's competitors. Transforming the
challenges into opportunities will separate the winners from the losers, and
Triangle is ready.
The company has a solid customer base in attractive growth regions of
the state, and Triangle's full complement of employees will be key in assuring
that the company succeeds in diversifying earnings through ongoing cross-selling
efforts. Triangle has the capability to track sales performance by individual
and by product so this data can be mined effectively for cross-selling
opportunities. And an ongoing sales training program is being supervised by a
consulting firm to assure that the company's efforts in this area continue to
expand.
Given the growth of the areas served by the company during a time of
economic confidence, Triangle Bancorp has succeeded in the mission of building a
superior banking company with the primary focus of delivering excellent customer
service, optimizing shareholder value, and providing career opportunities for
employees.
The company's acquisition strategy has served Triangle well in
establishing a solid base of customers and impressive market shares -- a solid
franchise on which the company will build for the future. This foundation will
be leveraged as the company remains focused on its goal of delivering 8-12%
annual asset growth and a return on equity of 15-18%.

THE TRIANGLE FRANCHISE IS SOLID, AND IT'S READY FOR NEW
OPPORTUNITIES.

"We believe the Triangle franchise has value for three simple reasons:

o The company is efficiently managed, enabling consistent and strong
EPS growth.

o Above-average growth prospects are realistic, given expanded
product offerings and 15% historic internal loan growth.

o The company is geographically well positioned in desirable markets."

R. Harold Schroeder, Peter Kuper Keefe, Bruyette & Woods, Inc. October, 1998

Triangle Bancorp, Inc. and Subsidiaries

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW
The purpose of the following discussion is to provide the reader with a concise
understanding of the performance and financial condition of Triangle Bancorp,
Inc. (the "Company"). The Company is a multibank holding company incorporated in
November 1991 under the laws of the State of North Carolina, with four wholly
owned subsidiaries, Triangle Bank ("Triangle"), Bank of Mecklenburg
("Mecklenburg") (collectively, the "Banks"), Coastal Leasing LLC ("Coastal") and
Triangle Capital Trust. A more detailed analysis is contained in the Company's
1998 Annual Report on Form 10-K filed with the Securities and Exchange
Commission.

[LINE CHART APPEARS BELOW WITH THE FOLLOWING PLOT POINTS:]

1994 1995 1996 1997 1998
---- ---- ---- ---- ----
Assets $323 $795 $971 $1,605 $2,123
Deposits 280 662 848 1,192 1,626
Loans 221 538 640 943 1,364

GROWTH TRENDS
(in millions, on an as reported basis)

HIGHLIGHTS
During 1998, the Company continued to grow both internally and through
acquisitions. In the second quarter, the Company acquired Guaranty State Bancorp
("Guaranty"). Guaranty had $103 million in assets and four branch locations in
Durham, North Carolina. During the third quarter, the Company acquired United
Federal Savings Bank ("United Federal"). United Federal, headquartered in Rocky
Mount, North Carolina, had $302 million in total assets and added eight branches
to the Company.
These two acquisitions expanded the Company's presence in two metropolitan
statistical areas and the Company entered four new communities. United Federal
brought an established mortgage origination business as well as a mortgage
servicing portfolio to the Company.
Both 1998 mergers were accounted for as a pooling-of-interests and therefore
all prior period financial information has been restated to include Guaranty and
United Federal.
Recurring net income for the year ended December 31, 1998 was $24.5 million,
an increase of $4.6 million, or 23%, over the prior year. Recurring diluted
earnings per share grew 22% to $.95 for the year ended December 31, 1998 from
$.78 for the year ended December 31, 1997. The return on average assets was
1.22% versus 1.13% and the return on average equity was 15.36% versus 13.66% for
the years ended December 31, 1998 and 1997, respectively.
Including nonrecurring merger expenses and the 1997 gain on sold branches,
net income for the year ended December 31, 1998 was $21.9 million, an increase
of 12% over the $19.5 million earned in the prior year. Diluted earnings per
share grew 11% to $.84 for the year ended December 31, 1998 from $.76 for the
year ended December 31, 1997. The return on average assets was 1.09% versus
1.11% and the return on average equity was 13.69% versus 13.38% for the years
ended December 31, 1998 and 1997, respectively.

Triangle Bancorp, Inc. and Subsidiaries

EARNINGS ANALYSIS
Net Interest Income
Net interest income, the principal source of the Company's earnings, is the
amount of income generated by earning assets (primarily loans and investment
securities) less the total interest cost of the funds obtained to carry them
(primarily deposits and other borrowings). The volume, rate and mix of both
earning assets and related funding sources determine net interest income.
1998 VERSUS 1997 Net interest income, stated on a taxable equivalent basis,
increased to $78.6 million for 1998 from $71.2 million for 1997. The net
interest margin declined to 4.24% for the year ended December 31, 1998 versus
4.36% for 1997.
The yield on earning assets was 8.49% for the year ended December 31, 1998
versus 8.63% for the prior year. An increase in the volume of earning assets of
$219 million more than offset this decrease in yield resulting in a net increase
of $16.4 million in interest income. The cost of interest bearing liabilities
decreased as well to 4.86% from 4.94%, however, as with the earning assets, the
volume increases resulted in more expense for 1998 when compared with 1997.
1997 VERSUS 1996 For 1997, the Company's taxable equivalent net interest
income was $71.2 million compared to $59.9 million in 1996. The net interest
margin increased to 4.36% in 1997 from 4.23% in 1996.
The yield on earning assets increased to 8.63% in 1997 over 8.45% in 1996
due primarily to a shift in the mix of earning assets with the loan portfolio,
the highest yielding asset, comprising 70.81% of earning assets in 1997 VERSUS
66.23% in 1996. Costing liabilities increased to 4.94% in 1997 from 4.88% in
1996 primarily due to the increased cost of other borrowings during 1997,
including the trust preferred securities issued in June 1997.

Provision for Loan and Lease Losses
1998 VERSUS 1997 The provision for loan and lease losses was $5.1 million for
both 1998 and 1997. Net charge-offs in both 1998 and 1997 were $3.3 million or
.25% and .29%, respectively, of average loans. The Company continued to maintain
adequate levels of coverage for nonperforming assets as well as general reserves
for the portfolio as described further in the "Loans and Leases" section below.
1997 VERSUS 1996 The 1997 provision for loan losses of $5.1 million was
significantly higher than the 1996 provision of $2.5 million due to loan growth
and increased charge-offs in 1997. Net charge-offs were $3.3 million or .29% of
average loans in 1997 versus $1.3 million or .14% of average loans in 1996. The
Company's loan loss reserve calculation continued to show adequate reserve
levels in 1997.

Noninterest Income
1998 VERSUS 1997 Noninterest income for 1998 was $18.5 million versus $14.9
million in recurring noninterest income for 1997, a 24% increase. In 1997, the
Company realized a nonrecurring $2 million gain on the sale of approximately $25
million in deposits. Including this 1997 gain, noninterest income was up 9.5 %
in 1998.
Service charges on deposit accounts increased 16% in 1998 compared to 1997.
This is due both to increases in fees charged and numbers of accounts. The
number of accounts increased due to internal growth as well as the acquisition
of ten branch offices, and their related deposit and loan accounts, from BB&T in
August 1997 ("1997 Branch Acquisition"). Other commissions and fees increased
significantly to $3.7 million versus $2.6 million in 1997. A significant portion
of this increase, $526,000, relates to the mortgage refinancing that occurred in
1998 due to the low interest rate environment. Other increases in 1998 over 1997
were seen in upcharges, ATM and debit card usage fees, credit card merchant
income and insurance commissions.
In 1998, the Company experienced substantial growth in its government
lending unit with gains on sales of government loans increasing to $1,028,000
from $338,000 in 1997. The Company also experienced an increase of $213,000 in
gains on the sale of mortgage loans in 1998 over the 1997 levels. Mortgage
servicing income decreased in 1998 compared to 1997 because of increased
amortization relating to accelerated mortgage prepayments in 1998.
Net gains on securities sales increased 20% over 1997 amounts to $1.7
million. However, this increase was offset somewhat by Mecklenburg discontinuing
its trading account in late 1997 that realized $681,000 in gains during 1997
compared to no trading gains in 1998.
Other operating income increased in 1998 due to increases in rental income
on subleased facilities as well as a gain on sale of fixed assets of $200,000 in
1998 versus a loss of $90,000 in 1997. An additional increase in other

Triangle Bancorp, Inc. and Subsidiaries

operating income was $374,000 from an investment of approximately $20 million in
bank owned life insurance purchased by Triangle in the third quarter of 1998.
1997 VERSUS 1996 Recurring noninterest income increased to $14.9 million in
1997 from $12.4 million in 1996, an increase of 20%. Nonrecurring gains of $2
million on sales of deposits were realized in 1997 compared to $558,000 in 1996.
Including these items, noninterest income increased 30% in 1997 over 1996.
The primary source of increased revenues in 1997 was service charges on
deposit accounts. Net gains on sales of securities were higher in 1997 compared
to 1996 by $247,000. As discussed above, the trading account had $681,000 in
gains in 1997 but this was not applicable to 1996 as Mecklenburg held no trading
assets in 1996.
Other operating income also increased in 1997 over 1996 amounts by $582,000.
This increase was primarily in rental income received from subleasing facilities
during 1997, as well as losses on fixed assets disposals in 1996 of $223,000
compared to losses of $90,000 in 1997.

Noninterest Expense
1998 VERSUS 1997 Recurring noninterest expenses were $50.5 million for 1998, an
increase of 6% from $47.5 million for 1997. Amortization of intangibles during
1998 was higher than 1997 because the deposit premium related to the 1997 Branch
Acquisition had only 5 months of amortization in 1997 and a full year in 1998.
Also related to the 1997 Branch Acquisition, as well as the completion of a new
Operations Center in February 1998, was an increase in occupancy, furniture and
equipment, and telephone expenses for the year ended December 31, 1998 compared
to 1997. Decreases were seen in professional fees, advertising and office
expenses in 1998 when compared to 1997 due to efficiencies achieved from the
acquisitions in late 1997 of Bank of Mecklenburg and Coastal Leasing and the
1998 acquisitions of Guaranty and United Federal. Salaries and benefits remained
flat in 1998 compared to 1997 due to the mergers described above.
Nonrecurring 1998 expenses were $4.4 million compared to $2.7 million in
1997. The 1998 items relate to the acquisitions of Guaranty and United Federal.
In 1997, the amounts relate to the acquisitions of Bank of Mecklenburg, Coastal
Leasing and the 1997 Branch Acquisition. These expenses included severance,
various professional fees, data conversion fees and other merger related
expenses.
1997 VERSUS 1996 Recurring noninterest expenses of $47.5 million for 1997
increased 10% from $43.1 million for 1996. There was a 6.9% increase in salaries
and benefits due to normal merit increases as well as growth of the Company,
including the 1997 Branch Acquisition. Amortization expense increased due to the
five months of amortization of the deposit premium from the 1997 Branch
Acquisition. Legal and professional fees were up, due to general corporate
litigation as well as an increase in outside consulting services.
Nonrecurring expenses in 1997 were $2.7 million compared to $1.8 million in
1996. The 1997 amounts were related to the acquisitions of Bank of Mecklenburg,
Coastal Leasing and the 1997 Branch Acquisition. In 1996, the expenses related
to the one time special assessment of $1.3 million levied by the Savings
Association Insurance Fund ("SAIF") on SAIF assessable deposits held by United
Federal. The Company also had 1996 merger expenses associated with the
acquisition of Granville United Bank and an acquisition of four branches.
Expenses incurred relating to acquisitions included severance, various
professional fees, data con-version fees and other merger related expenses.

Income Taxes
The Company's income tax expense for 1998 was approximately 33.9% of income
compared to the 1997 rate of approximately 35.0% and the 1996 rate of 37.4%.
These levels are less than the expected combined state and federal statutory
rates due to tax exempt securities held, which have increased during the last
three years, as well as the adjustment of the deferred tax asset to reflect
current tax rates.

BALANCE SHEET ANALYSIS
The Company's average assets increased to $2.0 billion for the year ended
December 31, 1998 compared to $1.758 billion for the year ended December 31,
1997 an increase of 14%. This growth, reflected primarily in the investment and
loan portfolios, was funded by deposit growth, borrowings from the Federal Home
Loan Bank ("FHLB") and short term borrowings. The growth in investments and FHLB
advances reflects Triangle's fourth quarter 1997 implementation of a leveraged
investment program which employed a mix of fixed and variable

Triangle Bancorp, Inc. and Subsidiaries

FHLB borrowings to purchase 3-5 year average life collateralized mortgage-backed
securities. The Company continued to have a strong ratio of average earning
assets to total average assets of 92.13% for the year ended December 31, 1998
and 92.83% for the year ended December 31, 1997.
At year end December 31, 1998, the Company's total assets were $2.1 billion
compared to $2 billion for the year ended December 31, 1997. Total equity was
$163 million at year end 1998 compared to $152 million at year end 1997.

Loans and Leases
The loan and lease portfolio constitutes the Company's largest earning asset.
During 1998, average net loans and leases increased by $148 million to $1.3
billion over the 1997 level of $1.155 billion, an increase of 13%. This increase
was due to loan demand throughout the year in many of the Company's service
areas.
The components of nonperforming assets are nonaccrual loans, loans 90 days
or more past due and other real estate owned ("OREO"). Nonperforming assets at
December 31, 1998 were $12.7 million or .92% of gross loans and OREO, an
increase over the $9.2 million or .71% of gross loans and OREO at December 31,
1997. The 1998 increase is primarily in other real estate owned and nonaccrual
loans while nonperforming loans decreased $300,000. Much of the increase in OREO
relates to one property from a former United Federal loan and two properties at
Mecklenburg. United Federal also had a $1.9 million loan classified as
nonaccrual during 1998 causing much of the increase in nonaccrual loans. Net
charge-offs for 1998 were .25% of average loans versus .29% for 1997.
The classification "nonaccrual" identifies those loans which management
recognizes as collection problems, but which have not been identified as losses.
Loans are placed on nonaccrual status when payments of interest and/or principal
have remained delinquent for a period of 90 days or more or when management's
evaluation indicates probable default prior to the 90 day delinquency period,
unless the loan is both well secured and in the process of collection. The
Company's credit policy does not allow new funds to be committed to borrowers
who have loans in nonaccrual status.
A loan is considered impaired based on current information and events if it
is probable that the Company will be unable to collect the scheduled payments of
principal or interest when due according to the contractual terms of the loan
agreement. The measurement of impaired loans is generally based on the present
value of expected future cash flows discounted at the historical effective
interest rate, except that collateral-dependent loans are measured for
impairment based on the fair value of the collateral. During 1998 and 1997, the
Company did not have a significant investment in loans determined to be
impaired.
There are no loans, other than those included in nonperforming assets, that
(i) represent or result from trends or uncertainties which management reasonably
expects will materially impact future operating results, liquidity, or capital
resources, or (ii) represent material credits about which management is aware of
any information which causes management to have serious doubts as to the ability
of such borrowers to comply with the loan repayment terms.
The adequacy of the allowance for loan and lease losses is monitored by
management through an internal loan review process. Among the factors
determining the level of the allowance are loan growth, projected net
charge-offs, the amount of nonperforming and past due loans and current and
anticipated economic conditions.

[BAR CHART APPEARS BELOW WITH THE FOLLOWING PLOT POINTS:]

1994 1995 1996 1997 1998
---- ---- ---- ---- ----
.50% .15% .14% .29% .25%

NET CHARGE-OFFS AS A %
OF AVERAGE LOANS

Triangle Bancorp, Inc. and Subsidiaries

The allowance for loan and lease losses at December 31, 1998 was 1.42% of
gross loans an increase over the 1.38% in 1997. Given the increase in
nonaccruals and OREO discussed above, the allowance for loan and lease losses
has decreased to 154% of nonperform ing assets in 1998 compared to 194% in 1997.
While nonperforming assets have increased during 1998, based on information
currently available to management as described in the previous paragraph, the
allowance for loan losses is believed to be adequate. However, future additions
to the allowance may be necessary based on changes in economic conditions or the
circumstances of individual borrowers which may impact borrowers' ability to
repay their loans. The most recent regulatory agency examinations have not noted
any material problem loans that had not been previously identified by
management; however, examinations in the future may result in regulatory
agencies requiring additions to the provision for loan losses based on
information available at the time of the examination.

Securities, Federal Funds Sold and
Interest Bearing Deposits
Average securities, at cost, increased 24% when comparing the average for the
year ended December 31, 1998 to the year ended December 31, 1997. This increase
reflects the leveraged investment strategy employed during the fourth quarter of
1997.
At December 31, 1998, the Company had no federal funds sold compared to $4.2
million at December 31, 1997. Interest bearing deposits in banks decreased $33
million to $911,000. In 1997, Mecklenburg had interest bearing deposits at the
FHLB as collateral for an advance that has since been repaid resulting in the
decrease.
At December 31, 1998, securities available for sale increased $36 million
and securities held to maturity decreased $19.5 million for a net increase of
$16.5 million. Collateralized mortgage-backed securities represent approximately
37% of the total securities portfolio, US Treasury and Agency obligations
represent approximately 37% of the portfolio and municipal obligations represent
approximately 14% of the portfolio. The remaining portfolio is in
mortgage-backed securities, FHLB, Federal Home Loan Mortgage Company and Federal
Reserve Bank stock.

Deposits
Average deposits grew 10% to $1.583 billion for the year ended December 31, 1998
compared to $1.440 billion for the year ended December 31, 1997. This growth was
found in all categories of deposits, with noninterest bearing and time deposits
greater than $100,000 showing the most growth.

Other Borrowings
At December 31, 1998 the Company had short term debt of $159 million. Short term
debt was comprised of $67 million in federal funds purchased, $18.5 in
repurchase agreements, $44.7 in reverse repurchase agreements and $28 million in
masternotes. At year end December 31, 1997, the Company had $61.5 million in
short term debt consisting of $24.8 in federal funds purchased, $20.6 in
repurchase agreements and $15.7 million in masternotes.
Average FHLB advances increased to $150 million for the year ended December
31, 1998 compared to an average of $80 million for the year ended December 31,
1997. The 1998 advances were higher due to the Company's leveraged investment
strategy employed in the fourth quarter of 1997.

Capital
The Company's primary source of new capital is retained earnings. Management
feels the Company has other funding sources if needed, including the ability to
issue additional common stock or debt. In addition, in 1997 the Company issued
$20 million in Trust Securities which are classified as Tier 1 regulatory
capital by the Company. The adequacy of capital is reviewed regularly, in light
of current plans and economic conditions, to ensure that sufficient capital is
available for current and future needs, to minimize the Company's cost of
capital and to assure compliance with regulatory requirements.
Current Federal regulations require that the Banks maintain a minimum ratio
of total capital to risk weighted assets of 8%, with at least 4% being in the
form of Tier I capital, as defined in the regulations. In addition, the Banks
must maintain a leverage ratio of 4%. As of December 31, 1998, the Banks'
capital exceeded the current capital requirements. The Banks currently expect to
continue to exceed these minimums without altering current operations or
strategy.
The Company recognizes the need to balance the retention of sufficient
capital to support future growth, meet regulatory requirements and provide
shareholders with a current cash return on their investment. As a

Triangle Bancorp, Inc. and Subsidiaries

result, for the years ended December 31, 1998 and 1997, cash dividends paid were
38% and 32% of earnings, respectively. Excluding nonrecurring income and
expenses, cash dividends of 34% and 31% of earnings were paid for the years
ended December 31, 1998 and 1997, respectively.

Asset and Liability Management and Market Risk
The largest component of the Company's earnings is net interest income,
which can fluctuate widely when significant interest rate movements occur.
Interest rate sensitivity inherent in its lending and deposit taking activities
is the Company's market risk. Management has formed an Asset Liability Committee
("ALCO") which is responsible for minimizing the Company's exposure to interest
rate risk and assuring an adequate level of liquidity.
To mitigate the impact of interest rate movements, the balance sheet must be
structured so that repricing opportunities exist for both assets and liabilities
in generally equivalent amounts at approximately the same time intervals.
Imbalances in these repricing opportunities at any point in time constitute
interest rate sensitivity. Interest rate sensitivity management measures the
potential exposure to fluctuating interest rates. The Company's objective in
managing interest rate sensitivity is to achieve reasonable stability in the net
interest margin and the market value of portfolio equity throughout economic and
interest rate cycles by maintaining the proper balance of rate sensitive assets
and liabilities. The market value of portfolio equity is the present value of
expected cash flows from assets, liabilities and off balance sheet contracts
using current market discount rates. The major factors that are used to manage
interest rate risk include the mix of fixed and floating interest rates,
pricing, and maturity patterns of all asset and liability accounts. ALCO
regularly reviews the Company's sensitivity position and evaluates alternative
sources and uses of funds.
The Company's interest sensitivity is monitored using computer simulation
programs which analyze the effect of various rate environments on the Company's
net interest margin as well as the market value of portfolio equity.
In modeling the interest sensitivity of the Company's balance sheet,
assumptions must be made concerning the repricing of nonmaturing liabilities
such as deposit transaction accounts. Management has concluded that the
historical experience of the Company and the industry in general provide the
best basis for determining the repricing characteristics of these accounts.
Accordingly, management places a portion of transaction account balances as
repricing immediately and the remainder in the one to five year time period.
Assumptions regarding expected cash flows are based on the individual maturities
of the Company's securities, loans, deposits and other borrowings.
The Company has historically monitored its interest sensitivity within an
acceptable range in both rising and falling interest rate environments and keeps
its exposure to changing rates to a manageable level. In determining if interest
rate risk is within an acceptable range, the Company simulates both increases
and decreases in rates of 200 basis points over a twelve month period. The
Company's policy in measuring interest rate risk on net interest margin is to
limit the risk to 5% of net interest margin. With regards to market value of
portfolio equity, the Company's policy is not to have volatility of more than 1%
of the book value of total assets. As of December 31, 1998, the Company was
within both of these policies.
Periodically, the Company uses off-balance sheet derivative instruments to
provide a cost-effective way to manage interest rate sensitivity. At December
31, 1998, Mecklenburg had a $15 million notional amount interest rate floor used
to hedge the balance sheet. It is marked to market each month, had a $17,000
value at December 31, 1998 and expires in March, 2000.
To ensure that sufficient funds are available for loan growth and deposit
withdrawals, as well as to provide for general needs, the Company must maintain
an adequate level of liquidity. Both assets and liabilities provide sources of
liquidity. Asset liquidity comes from the Company's ability to convert
short-term investments into cash and from the maturity and repayment of loans
and investment securities. Liability liquidity is provided by the Company's
ability to attract deposits and borrow against unencumbered assets. The primary
source of liability liquidity is the Company's customer base which provides core
deposit growth. The overall liquidity position of the Company is closely
monitored and evaluated regularly by ALCO. Management believes the Company's
liquidity sources at December 31, 1998 are adequate to meet its operating needs.

Triangle Bancorp, Inc. and Subsidiaries

EFFECT OF CHANGING PRICES
The results of operations and financial condition presented in this report are
based on historical cost information and are unadjusted for the effects of
inflation. Since the assets and liabilities of banks are primarily monetary in
nature (payable in fixed, determinable amounts) the performance of the Company
is affected more by changes in interest rates than by inflation. Interest rates
generally increase as the rate of inflation increases, but the magnitude of the
change in rates may be inconsistent. While the effect of inflation on banks is
normally not as significant as is its influence on those businesses which have
large investments in plant and inventories, it does have an effect during
periods of high inflation. There are normally corresponding increases in the
money supply, and banks will normally experience above-average growth in assets,
loans and deposits. Also, increases in the price of goods and services generally
will result in increased operating expenses. Inflation has not been a
significant factor in the Company's operations to date as the inflation rate has
been moderate since its inception.

IMPACT OF THE YEAR 2000 ISSUE
The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. As a result, many
automated applications may fail to function properly or may cease to function
unless corrected or replaced.
The Company is a "turnkey" institution; it does not write or develop any of
its own computer applications, but instead purchases or licenses its
applications from third party vendors. The Company has adopted a plan which
calls for the Company's applications to properly process dates in the Year 2000
and beyond by April 30, 1999. As a "turnkey" institution, the Company is in
dialogue with all of its vendors as to their preparedness for Year 2000. In
addition, the Company has hired an independent consultant to assist in all
phases of its Year 2000 Plan.
The Company has completed its assessment of its existing computer systems
and applications (including systems and applications acquired in mergers) and
has identified 30 mission critical applications. The Company has begun
renovation, validation and implementation of all of its mission critical
applications. Renovation for all mission critical applications was substantially
completed by December 31, 1998, and renovation for all non-mission critical
functions is expected to be completed by March 31, 1999. Validation and
implementation of all functions, both mission critical and non-mission critical,
is to be completed by April 30, 1999. As validation of a function occurs, the
Company develops a contingency plan for each function. As of December 31, 1998,
the Company has begun contingency planning for all identified mission critical
and non-mission critical functions. The Company also has identified mission
critical branches which it is committed to having operational in the event of
utility failure. The Company's internal audit department has been auditing and
will continue to audit the Company's progress under its Year 2000 plan, and also
will conduct independent verification of the Company's Year 2000 contingency
planning.
The Company has budgeted $1,000,000 for the Year 2000 plan, with consultant
fees of approximately $50,000 for 1997, $750,000 for 1998 and $200,000 for 1999.
Costs budgeted for hardware, software and customer communications related
specifically to the Year 2000 are not significant in 1997, 1998 and 1999 and are
anticipated to be less than $100,000 in the aggregate. All of these costs are
directly related to the assessment, renovation and validation of the Company's
computer applications. All Year 2000 expenses are paid from the Company's
operating income. As of December 31, 1998, the Company had spent approximately
$40,000 and $614,000 in 1997 and 1998, respectively, on Year 2000 issues. The
Company does not expect the costs of this process to be material to its
financial condition or results of operations.
Based on information now available, the Company anticipates its systems will
properly process dates in the year 2000 and beyond. The Year 2000 issue has not
delayed any of the Company's information technology projects.

FORWARD-LOOKING STATEMENTS
The foregoing discussion contains forward-looking statements about the Company's
financial condition and results of operations, which are subject to certain
risks and uncertainties, that could cause actual results to differ materially
from those reflected in the forward-looking statements. Readers are cautioned
not to place undue reliance on these forward-looking statements, which reflect
management's judgment only as of the date

Triangle Bancorp, Inc. and Subsidiaries

hereof. The Company undertakes no obligation to publicly revise these
forward-looking statements to reflect events and circumstances that arise after
the date hereof.
Some factors that may cause actual results to differ materially from these
forward-looking statements are the passage of unforeseen legislation or
regulation; interest rate changes that reduce margins; the Year 2000 issue not
being effectively corrected; and the Company's ability to accurately predict
loan loss provision needs using its present loan review process.

REPORT OF INDEPENDENT ACCOUNTANTS

THE BOARD OF DIRECTORS AND SHAREHOLDERS
Triangle Bancorp, Inc.

We have audited, in accordance with generally accepted auditing standards, the
consolidated balance sheets of Triangle Bancorp, Inc. and subsidiaries as of
December 31, 1998 and 1997, and the related consolidated statements of income,
changes in shareholders' equity and cash flows for each of the three years in
the period ended December 31, 1998 (not presented herein); and in our report
dated January 19, 1999, we expressed an unqualified opinion on those
consolidated financial statements.
In our opinion, the information set forth in the accompanying condensed
consolidated financial statements, when read in conjunction with the
consolidated financial statements from which it has been derived, is fairly
stated in all material respects in relation thereto.

/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Raleigh, North Carolina
January 19, 1999

Triangle Bancorp, Inc. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 1998 AND 1997
(in thousands, except share data)

1998 1997
-----------------------

ASSETS
Cash and due from banks $ 76,624 $ 59,938
Federal funds sold -- 4,219
Interest-bearing deposits in banks 911 34,195
Securities available for sale 482,155 446,363
Securities held to maturity, estimated market
value $82,790 in 1998 and $101,979 in 1997 81,138 100,666
Loans, less allowance for loan losses of $19,584 in 1998 and
$17,797 in 1997 1,363,553 1,273,139
Premises and equipment, net 40,492 40,281
Interest receivable 16,468 15,687
Deferred income taxes 10,597 7,695
Intangible assets, net 24,207 27,688
Other assets 26,939 5,766
-----------------------
$2,123,084 $2,015,637
========================
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand $ 224,732 $ 199,746
Interest-bearing demand 201,042 192,577
Savings and money market accounts 293,652 288,977
Large denomination certificates of deposit 217,598 156,536
Other time 688,874 712,404
-----------------------
Total deposits 1,625,898 1,550,240

Short-term debt 158,980 61,506
Federal Home Loan Bank of Atlanta advances 130,300 205,300
Corporation-obligated mandatorily redeemable capital
securities 19,952 19,951
Custodial accounts for serviced loans 7,243 5,197
Interest payable 8,292 9,380
Other liabilities 9,392 11,592
-----------------------
Total liabilities 1,960,057 1,863,166
-----------------------
Shareholders' equity:
Common stock; no par value; 50,000,000 shares authorized;
25,183,597 and 24,839,775 shares issued and
outstanding in 1998 and 1997, respectively 86,549 84,886
Retained earnings 80,753 67,217
Accumulated other comprehensive income (loss) (4,275) 368
-----------------------
Total shareholders' equity 163,027 152,471
-----------------------
$2,123,084 $2,015,637
========================

Triangle Bancorp, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(in thousands, except share data)

1998 1997 1996
------------------------------

Interest income:
Loans and fees on loans $121,640 $109,432 $ 88,734
Federal funds sold and securities purchased under resale
agreements 62 165 306
Securities 30,148 25,751 27,485
Deposits with other financial institutions 1,478 2,755 1,318
------------------------------
Total interest income 153,328 138,103 117,843
------------------------------
Interest expense:
Large denomination certificates of deposit 11,503 8,670 7,894
Other deposits 53,248 52,688 46,270
Borrowed funds 13,947 8,355 5,621
------------------------------
Total interest expense 78,698 69,713 59,785
------------------------------
Net interest income 74,630 68,390 58,058

Provision for loan losses 5,115 5,121 2,515
------------------------------
Net interest income after provision for loan losses 69,515 63,269 55,543
------------------------------
Noninterest income:
Service charges on deposit accounts 8,306 7,131 6,551
Other service charges, commissions and fees 3,669 2,559 2,500
Mortgage servicing fees net of amortization 738 1,101 1,266
Net gain on sales of securities 1,671 1,389 1,142
Net gain on trading account securities -- 681 --
Gain on sale of government loans 1,028 338 --
Gain on sale of mortgage loans 613 400 312
Investment commissions and fees 783 471 370
Gain on sale of deposits -- 2,000 558
Other operating income 1,648 852 270
------------------------------
Total noninterest income 18,456 16,922 12,969
------------------------------
Noninterest expense:
Salaries and employee benefits 21,750 22,051 20,623
Occupancy expense 5,006 4,421 3,875
Equipment expense 4,700 3,540 3,140
Amortization of intangible assets 3,175 2,180 1,528
Savings association insurance fund assessment -- -- 1,316
Merger expenses 4,373 2,651 494
Legal and professional fees 2,707 3,109 2,320
Stationery, printing and supplies 1,576 1,814 1,386
Other operating expense 11,609 10,359 10,194
------------------------------
Total noninterest expense 54,896 50,125 44,876
------------------------------
Income before income taxes 33,075 30,066 23,636

Income tax expense 11,217 10,540 8,840
------------------------------

Net income $21,858 $ 19,526 $ 14,796
==============================

Basic earnings per share $ .87 $ .79 $ .62
==============================

Diluted earnings per share $ .84 $ .76 $ .60
==============================

Triangle Bancorp, Inc. and Subsidiaries

BOARD OF DIRECTORS

TRIANGLE BANCORP AND TRIANGLE BANK

[TWO PHOTOGRAPHS APPEAR HERE]

STANDING, LEFT TO RIGHT: STANDING, LEFT TO RIGHT:

Willie S. Edwards Charles H. Ashford Jr., M.D.
Real Estate Developer Physician
Washington New Bern

J. Dal Snipes Boyd W. Harris, III
President Principal
Snipes Insurance Service, Inc. Harris, Harris & Company
Dunn Durham

N. Leo Daughtry Michael A. Maxwell
Attorney Senior Scientist
Daughtry, Woodard, Lawrence, and Starling Environmental Protection Agency
Smithfield Chapel Hill

N. Johnson Tilghman George W. Holt
Partner Executive Vice President, Retired
Tilghman & Butler Triangle Bank
Garner Whiteville

SEATED, LEFT TO RIGHT: SEATED, LEFT TO RIGHT:
Beverly B. Poston Carole S. Anders
Executive Vice President Community Volunteer
Bahakel Communications, Inc. Raleigh
Charlotte
Patrick H. Pope
Wendell H. Murphy Partner
Chairman and CEO Pope & Tart
Murphy Family Farms Dunn
Rose Hill

Triangle Bancorp, Inc. and Subsidiaries

[TWO PHOTOGRAPHS APPEAR HERE]

STANDING, LEFT TO RIGHT: STANDING, LEFT TO RIGHT: Edwin B. Borden (not pictured)
President
Michael S. Patterson* John A. Barker Borden Manufacturing Co.
Chairman, President and CEO Consultant Goldsboro
Triangle Bank Rocky Mount
Triangle Bancorp, Inc. Robert E. Bryan, Jr.* (not pictured)
Raleigh Robert L. Guthrie* Chairman
President and CEO Prime Express
William R. Pope Asura Corporation Fayetteville
President and CEO Research Triangle Park
Pope's Distributing Company David T. Clancy* (not pictured)
Coats Billy N. Quick, Sr. President
Executive Vice President Clancy & Theys Construction Co.
Sydnor M. White, Jr.* Triangle Bank Raleigh
President Oxford
Graham Realty, Inc.
Raleigh Charles J. Stewart
Executive Vice President
Earl Johnson, Jr.* Triangle Bank
Chairman Durham
Carolina Crane Corporation
Raleigh Seated, Left to Right:
J. Blount Williams*
Seated, Left to Right: President
James P. Godwin, Sr. Alfred Williams & Company
President Raleigh
Godwin Manufacturing Co., Inc.
Dunn Edythe M. Poyner*
President
John B. Harris, Jr. Capital Land Investment Company
Retired Raleigh
Raleigh

Triangle Bancorp, Inc. and Subsidiaries

EXECUTIVE OFFICERS

TRIANGLE BANCORP AND TRIANGLE BANK

Michael S. Patterson Debra L. Lee Edward O. Wessell
Chairman, Executive Vice President Executive Vice President
President and CEO Chief Financial Officer Branch Administration

Robert E. Branch Steven R. Ogburn
Executive Vice President Executive Vice President
Support Services Credit Administration

BOARD OF DIRECTORS

BANK OF MECKLENBURG

Helen C. Adams W. E. Bryant, Jr. Michael S. Patterson
President President Chairman, President
Helen Adams Realty Bryant & Clark Communications, Inc. and CEO
Triangle Bank
H. Perrin Anderson Aubrey J. Elam Triangle Bancorp, Inc.
Retired Managing General Partner
Anderson & Anderson, Inc. Airport Park 160 John T. Roper, M.D.
Retired
R. Scott Anderson Dee-Dee W. Harris Orthopaedic Surgeon
President President
Bank of Mecklenburg Harris Land Company Paul J. Simon
President
Stephen Bahakel Debra L. Lee Paul Simon Company
Vice President/Radio Division Executive Vice President
Bahakel Communications, Inc. Chief Financial Officer Allan W. Singer
Triangle Bank Attorney At Law
Carl. G. Belk Triangle Bancorp, Inc. Mitchell, Rallings, Singer,
President McGirt, Tissue, PLLC
Monroe Hardware

Triangle Bancorp, Inc. and Subsidiaries

SHAREHOLDER INFORMATION

Annual Meeting
The Annual Meeting of the shareholders of Triangle Bancorp, Inc. will be held on
Tuesday, April 27, 1999, at the North Raleigh Hilton, Raleigh, NC at 10:00 AM.

Common Stock
At December 31, 1998, the Company had 25,183,597 shares of common stock
outstanding which was held by approximately 8,000 shareholders of record.
Beginning December 30, 1997, the Company's stock was listed on the New York
Stock exchange under the ticker symbol TGL. Prior to December 30, 1997 the
Company's stock was traded Over-the-Counter on the NASDAQ National Market under
the ticker symbol TRBC.

Quarterly Common
Stock Prices and Dividends
The table below sets forth the range of high and low per share sales prices as
reported by the NYSE from December 30, 1997 forward and by NASDAQ for prior
periods. The table also sets forth per share dividend information for the period
indicated.

Independent Accountants
PricewaterhouseCoopers LLP
Certified Public Accountants
150 Fayetteville Street Mall
Suite 2300
Raleigh, North Carolina 27601

Dividend Reinvestment
and Stock Purchase Plan
Triangle Bancorp, Inc. has a Dividend Reinvestment and Stock Purchase Plan which
allows shareholders to reinvest dividends and buy additional stock in any amount
up to $2,000 per quarter after they have made their initial purchase of stock.
For further information and an application, contact our Stock Transfer Agent.

About This Report
The 1998 Annual Report is presented using a summary format intended to provide
information regarding Triangle Bancorp, Inc.'s financial position and results of
operations in a concise manner that will be meaningful and useful to our
shareholders. The audited financial statements and detailed analytical schedules
are contained in the Triangle Bancorp, Inc. Annual Report on Form 10-K for the
year ended December 31, 1998.

Form 10-K
A copy of Triangle Bancorp, Inc.'s Form 10-K Annual Report to the Securities and
Exchange Commission for 1998 will be furnished, without charge, upon written
request to:
Investor Relations
Triangle Bancorp, Inc.
P.O. Box 31828
Raleigh, North Carolina 27622

Equal Opportunity Employer
As an equal opportunity employer, Triangle Bancorp, Inc. pledges to recruit,
hire, train and promote persons in all job classifications, without regard to
race, color, religion, sex, national origin, age, disability or veteran status.

Triangle Bancorp, Inc.
Corporate Headquarters
4300 Glenwood Avenue
Raleigh, NC 27612
(919) 881-0455

Stock Transfer Agent and Registrar
Registrar and Transfer Company
10 Commerce Drive
Cranford, NJ 07016-3572
800-368-5948

1998 1997
High Low Dividend High Low Dividend
---- --- -------- ---- --- --------
Fourth Quarter 19.75 14.88 0.09 23.92 16.33 0.07
Third Quarter 21.06 14.94 0.08 20.00 14.50 0.06
Second Quarter 20.92 18.75 0.08 15.00 12.33 0.06
First Quarter 23.58 19.38 0.07 13.67 10.67 0.06

[TRIANGLE BANCORP'S LOGO APPEARS HERE]

POST OFFICE BOX 31828, RALEIGH, NC 27622, WWW.TRIANGLEBANK.COM