EPIK Epic Bancorp (MM)

Epic Bancorp (the �Company") (NASDAQ:EPIK), the parent company for Tamalpais Bank and Epic Wealth Management, today reported net income for the quarter ended March 31, 2007 of $1,018,000, a 14.2% increase over net earnings of $892,000 for the same quarter in 2006. Diluted earnings per share for the quarter ended March 31, 2007 was $0.25, an 11.5% increase over $0.22 for the same quarter in 2006. Per share results for 2006 have been restated for the 7% stock dividend paid February 14, 2007. Separately, the Company today announced that its Board of Directors has declared a cash dividend of $0.045 per share, which is 20% higher than the $0.0374 dividend declared in each of the four quarters of 2006. The dividend will be paid on May 31, 2007 to shareholders of record as of May 15, 2007. The Company had previously declared dividends of $0.028 in each of the four quarters of 2005 and $0.0233 in each of the four quarters of 2004. Dividends per share results for 2006 and prior have been restated for the 7% stock dividend paid February 14, 2007. The total assets of the Company as of March 31, 2007 were $500.2 million, down $3.3 million (0.7%) from $503.5 million as of December 31, 2006. During the first quarter of 2007 net loans receivable decreased by 1.9% to $413.5 million, deposits of $369.7 million remained flat, investment securities increased 0.9% to $48.8 million, and stockholders� equity increased 4.1% to $32.1 million from December 31, 2006. �Our asset quality remains very strong, with nonperforming loans at 0.13% of total assets. We have also had no loan losses for 41 consecutive quarters,� said Mark Garwood, CEO/president of the Company. The Company's net interest income before its provision for loan losses was $4,290,000 in the first quarter of 2007, compared to $4,390,000 in the same quarter of 2006. The decrease in net interest income was primarily attributable to a decrease in the net interest margin partially offset by an increase in the earning asset base. During the first quarter of 2007 loan payoffs exceeded their historical levels and loan originations were lower than previous quarters. The provision for loan losses in the first quarter of 2007 was a recovery of $86,000 as compared to a provision of $143,000 in the first quarter of 2006. The recovery recorded in the first quarter of 2007 was necessitated by the quarterly decrease in the loan portfolio coupled with continued strong asset quality. Noninterest income in the first quarter of 2007 was $500,000, compared to $494,000 in the same period in 2006. The increase in noninterest income in the first quarter was primarily due to an increase in service charges and other income, partially offset by a decrease in the volume of Small Business Administration (SBA) loans sold. The net interest margin on earning assets for the first quarter of 2007 was 3.58%, versus 3.93% in the first quarter of 2006 and 3.59% in the fourth quarter of 2006. Total noninterest expense in the first quarter of 2007 was $3,275,000, a 2.0% decrease compared to $3,341,000 for the same period in 2006. This decrease was primarily due to $104,000 decrease in personnel expenses, partially offset by a $20,000 increase in other administrative expenses. The income tax provision in the first quarter of 2007 totaled $583,000 as compared to $508,000 in the first quarter of 2006. �We had a challenging quarter growing loans and deposits. We made a strategic decision to not fund loans at rates that were too low to profitably retain on our balance sheet, or compromise our pristine credit quality,� Garwood said. �We also chose not to match the high deposit rates paid by some of our competitors. Nevertheless, we were able to grow noninterest checking accounts by 4.1% in the quarter and continued to control operating expenses, as noninterest expense decreased 2.0% from the prior year. Our net interest margin decreased one basis point from the fourth quarter of 2006 and we believe most of the compression of our net interest margin is behind us. �We were also able to increase our dividend. Our dividend program, which began in 2004 has steadily increased each year, we are pleased to share our success with our shareholders," he said. About Epic Bancorp Epic Bancorp (www.epicbancorp.com) based in San Rafael, CA, is the parent company of Tamalpais Bank and Epic Wealth Management. The Company had $500 million in assets and $370 million in deposits as of March 31, 2007. Shares of the Company's common stock are traded on the NASDAQ Capital Market System under the symbol EPIK. For additional information, please contact Mark Garwood at 415-526-6400. About Tamalpais Bank Tamalpais Bank, a wholly owned subsidiary of Epic Bancorp, operates seven branches in Marin County and a loan production office in Santa Rosa. The branches are located in Corte Madera, Greenbrae, Mill Valley, San Anselmo, San Rafael, Terra Linda, and Tiburon/Belvedere. About Epic Wealth Management Epic Wealth Management specializes in helping clients of Tamalpais Bank and other high net worth families reach their lifetime financial goals through a collaborative, comprehensive and education-oriented approach to investment management. Epic Wealth Management is located at 851 Irwin Street in San Rafael. For additional information about Epic Wealth Management, please call 415-526-4300. This news release contains forward-looking statements with respect to the financial condition, results of operation and business of Epic Bancorp and its subsidiaries. These include, but are not limited to, statements that relate to or are dependent on estimates or assumptions relating to the prospects of loan growth, credit quality, changes in securities or financial markets, and certain operating efficiencies resulting from the operations of Tamalpais Bank and Epic Wealth Management . These forward-looking statements involve certain risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following possibilities: (1) competitive pressure among financial services companies increases significantly; (2) changes in the interest rate environment reduce interest margins; (3) general economic conditions, internationally, nationally or in the State of California are less favorable than expected; (4) legislation or regulatory requirements or changes adversely affect the businesses in which the consolidated organization is or will be engaged;(5) the ability to satisfy the requirements of the Sarbanes-Oxley Act and other regulations governing internal controls; (6) volatility or significant changes in the equity and bond markets which can affect overall growth and profitability of our wealth management business and; (7) other risks detailed in the Epic Bancorp filings with the Securities and Exchange Commission. When relying on forward-looking statements to make decisions with respect to Epic Bancorp, investors and others are cautioned to consider these and other risks and uncertainties. Epic Bancorp disclaims any obligation to update any such factors or to publicly announce the results of any revisions to any of the forward-looking statements contained herein to reflect future events or developments. EPIC BANCORP AND SUBSIDIARIESConsolidated Balance Sheets � � March 312007 December 31,2006 $ Change� % Change� (unaudited) Assets Cash and cash equivalents: Cash and due from banks $ 4,234,467� $ 3,750,262� $ 484,205� 12.9% Federal funds sold � 13,061,582� � 8,525,772� � 4,535,810� 53.2% Total Cash and Cash Equivalents 17,296,049� 12,276,034� 5,020,015� 40.9% Interest-bearing time deposits in other financial institutions 998,561� 987,305� 11,256� 1.1% � Investment securities Available-for-sale 28,750,434� 26,515,887� 2,234,547� 8.4% Held-to-maturity, at cost 20,039,831� 21,823,305� (1,783,474) -8.2% Federal Home Loan Bank restricted stock, at cost 4,988,000� 5,891,900� (903,900) -15.3% Pacific Coast Banker's Bank restricted stock, at cost 50,000� 50,000� -� 0.0% Loans receivable 418,113,391� 426,006,504� (7,893,113) -1.9% Less: Allowance for loan losses � (4,585,307) � (4,671,596) � 86,289� -1.8% 413,528,084� 421,334,908� (7,806,824) -1.9% Bank premises and equipment, net 5,111,014� 5,274,915� (163,901) -3.1% Accrued interest receivable 3,067,718� 3,297,170� (229,452) -7.0% Other assets � 6,387,095� � 6,062,952� � 324,143� 5.3% Total Assets $ 500,216,786� $ 503,514,376� $ (3,297,590) -0.7% � Liabilities and Stockholders' Equity Liabilities Deposits Noninterest-bearing deposits $ 18,884,185� $ 18,134,565� $ 749,620� 4.1% Interest-bearing checking deposits 7,854,554� 8,432,730� (578,176) -6.9% Money market and saving deposits 160,435,888� 150,011,698� 10,424,190� 6.9% Certificates of deposit greater than or equal to $100,000 121,182,713� 129,011,093� (7,828,380) -6.1% Certificates of deposit less than $100,000 � 61,337,573� � 64,214,598� � (2,877,025) -4.5% Total Deposits 369,694,913� 369,804,684� (109,771) 0.0% Federal Home Loan Bank Advances 81,141,933� 86,250,777� (5,108,844) -5.9% Junior Subordinated Debentures 13,403,000� 13,403,000� -� 0.0% Accrued interest payable and other liabilities � 3,839,497� � 3,175,055� � 664,442� 20.9% Total Liabilities � 468,079,343� � 472,633,516� � (4,554,174) -1.0% � Commitment and Contingencies -� -� -� 0.0% � Stockholders' Equity Common stock, no par value; 10,000,000 shares authorized; 3,966,271 and 3,960,852 shares issued and outstanding at March 31, 2007 and December 31, 2006, respectively 10,446,922� 10,384,816� 62,106� 0.6% Paid-In-Capital 490,110� 381,993� 108,117� 28.3% Retained earnings 21,253,339� 20,236,571� 1,016,768� 5.0% Accumulated other comprehensive income/loss � (52,928) � (122,520) � 69,592� -56.8% Total Stockholders' Equity � 32,137,443� � 30,880,860� � 1,256,583� 4.1% Total Liabilities and Stockholders' Equity $ 500,216,786� $ 503,514,376� $ (3,297,590) -0.7% EPIC BANCORP AND SUBSIDIARIESConsolidated Statements of IncomeFor the Periods Ended March 31, 2007 and 2006 � Three Months EndedMarch 31, � 2007� � 2006� $ Change� % Change� (Unaudited) Interest Income Interest and fees on loans $ 8,813,046� $ 7,451,525� $ 1,361,521� 18.3% Interest on investment securities 566,859� 424,282� 142,577� 33.6% Interest on Federal funds sold 45,398� 76,103� (30,705) -40.3% Interest on other investments 80,021� 72,041� 7,980� 11.1% Interest on deposits in other financial institutions � 11,256� � 10,742� � 514� 4.8% Total Interest Income � 9,516,580� � 8,034,693� � 1,481,887� 18.4% � Interest Expense Interest expense on deposits 4,093,507� 2,670,139� 1,423,368� 53.3% Interest expense on borrowed funds 843,970� 760,259� 83,711� 11.0% Interest expense on Junior Subordinated Debentures � 289,274� � 214,659� � 74,615� 34.8% Total Interest Expense � 5,226,751� � 3,645,057� � 1,581,694� 43.4% Net Interest Income Before Provision for Loan Losses 4,289,829� 4,389,636� (99,807) -2.3% � Provision for Loan Losses � (86,289) � 142,788� � (229,077) -160.4% Net Interest Income After Provision for Loan Losses � 4,376,118� � 4,246,848� � 129,270� 3.0% � Noninterest Income Gain on sale of loans, net 158,438� 209,230� (50,792) -24.3% Loan servicing 27,027� 32,313� (5,286) -16.4% Registered Investment Advisory Services fee income 159,993� 128,626� 31,367� 24.4% Other income � 154,299� � 123,633� � 30,666� 24.8% Total Noninterest Income � 499,757� � 493,802� � 5,955� 1.2% � Noninterest Expenses Salaries and benefits 1,903,043� 2,007,198� (104,155) -5.2% Occupancy 348,347� 340,975� 7,372� 2.2% Advertising 136,631� 138,531� (1,900) -1.4% Professional 114,390� 118,799� (4,409) -3.7% Data processing 111,325� 106,980� 4,345� 4.1% Equipment and depreciation 199,270� 186,867� 12,403� 6.6% Other administrative � 461,876� � 441,616� � 20,260� 4.6% Total Noninterest Expense � 3,274,882� � 3,340,966� � (66,084) -2.0% � Income Before Income Taxes 1,600,993� 1,399,684� 201,309� 14.4% Provision for Income Taxes � 583,064� � 508,076� � 74,988� 14.8% Net Income $ 1,017,929� $ 891,608� $ 126,321� 14.2% Earnings Per Share Basic $ 0.26� $ 0.22� $ 0.04� 15.9% � Diluted $ 0.25� $ 0.22� $ 0.03� 11.5% EPIC BANCORP AND SUBSIDIARIESSelected Ratios and Other DataUnaudited(Dollars in Thousands Except Per Share Amounts) � At or For theThree Months EndedMarch 31, 2007� 2006� Profitability Ratios: Return on average assets 0.82% 0.77% Return on average equity 12.91% 12.94% Net Interest Margin 3.58% 3.93% Efficiency ratio 68.4% 68.4% � Other Information: Average total assets $ 498,973� $ 464,901� Average interest earning assets $ 486,627� $ 452,676� Average equity $ 31,547� $ 27,568� Average Basic Shares Outstanding 3,963,581� 3,945,377� Average Diluted Shares Outstanding 4,153,390� 3,960,036� Basic earnings per share $ 0.26� $ 0.22� Diluted earnings per share $ 0.25� $ 0.22� � At March 31,2007 At December 31,2006 Share Information: Book value per share $ 8.10� $ 7.80� Shares outstanding 3,966,271� 3,960,852� � Asset Quality Information: Non-performing loans $ 531� $ -� Other real estate owned $ -� $ -� Allowance for loan losses $ 4,585� $ 4,672� Non-performing loans / total loans 0.13% 0.00% Non-performing assets / total assets 0.11% 0.00% Allowance for loan losses / loans outstanding 1.10% 1.10% Allowance for loan losses / non-accrual loans 863.52% N/A� � Tamalpais Bank Capital Ratios: Tier 1 leverage ratio 8.89% 8.62% Tier 1 risk based capital ratio 10.17% 9.70% Total risk based capital ratio 11.23% 10.75% EPIC BANCORP AND SUBSIDIARIESAverage Balance Sheets (Unaudited) � For the Three Months Ended (dollars in thousands) 3/31/07� 3/31/06� AverageBalance InterestIncome/Expense YieldsEarned/Paid AverageBalance InterestIncome/Expense YieldsEarned/Paid Assets Investment securities - taxable (1) $ 49,896� $ 567� 4.61% $ 45,407� $ 424� 3.79% Other investments 5,274� 80� 6.15% 6,105� 72� 4.78% Interest bearing deposits in other financial institutions 1,025� 11� 4.35% 1,121� 11� 3.98% Federal funds sold 3,563� 45� 5.12% 7,019� 76� 4.39% Loans (2) � 426,869� � 8,813� 8.37% � 393,024� � 7,452� 7.69% Total Interest Earning Assets 486,627� 9,516� 7.93% 452,676� 8,035� 7.20% Allowance for loan losses (4,683) (4,278) Cash and due from banks 4,840� 6,020� Net premises, furniture and equipment 5,097� 4,838� Other assets � 7,092� � 5,645� Total Assets $ 498,973� $ 464,901� � Liabilities and Shareholders' Equity Interest bearing checking $ 7,919� 12� 0.61% $ 7,096� 11� 0.63% Savings deposits (3) 151,706� 1,691� 4.52% 160,498� 1,364� 3.45% Time deposits 188,348� 2,390� 5.15% 138,314� 1,295� 3.80% Other borrowings 84,100� 844� 4.07% 100,017� 760� 3.08% Junior Subordinated Debentures � 13,403� � 289� 8.74% � 10,310� � 215� 8.46% Total Interest Bearing Liabilities 445,476� 5,226� 4.76% 416,235� 3,645� 3.55% Noninterest deposits 17,985� 17,591� Other liabilities � 3,965� � 3,507� Total Liabilities 467,426� 437,333� Shareholders' Equity � 31,547� � 27,568� Total Liabilities and Share-holders' Equity $ 498,973� $ 464,901� � � Net interest income $ 4,290� $ 4,390� Net interest spread (4) 3.17% 3.65% Net interest margin (5) 3.58% 3.93% � (1)��The yields for securities were computed using the average amortized cost and therefore do not give effect for changes in fair value. � (2)��Loans, net of unearned income, include non-accrual loans but do not reflect average reserves for possible loan losses. � (3)��Savings deposits include Money Market accounts. � (4)��Net interest spread is the interest differential between total interest earning assets and total interest-bearing liabilities. � (5)��Net interest margin is the net yield on average interest earning assets.