EPIK Epic Bancorp (MM)

Epic Bancorp (the �Company") (NASDAQ:EPIK), the parent company for Tamalpais Bank and Epic Wealth Management, today reported its financial results for the period ending June 30, 2007. Net income for the quarter ended June 30, 2007 was $1,067,000, or $0.27 per diluted share, compared with net earnings of $909,000, or $0.23 per diluted share for the same quarter ended in 2006. The growth in earnings of $158,000 represented an increase of 17.4% over the comparable period last year. Quarterly diluted earnings per share increased 17.4% over the comparable period last year. Per share results for 2006 have been restated for the 7% stock dividend paid February 14, 2007. Net income for the six months ended June 30, 2007 of $2,085,000 represented an increase of $284,000 or 15.8% over net income of $1,801,000 in the comparable period last year. Year-to-date diluted earnings per share of $0.52 increased 15.6% from $0.45 in comparable period last year. The total assets of the Company increased to $521.8 million as of June 30, 2007, up $18.3 million (3.6%) from $503.5 million as of December 31, 2006 and up $21.6 million (4.3%) from March 31, 2007. For the three and six months ended June 30, 2007: loans increased by $19.9 million (4.8%) and $12.1 million (2.9%), respectively, to $433.5 million; deposits remained flat and decreased by $0.1 million (0.0%), respectively, to $369.7 million; checking accounts increased by $3.1 million (16.5%) and $3.9 million (21.3%), respectively, to $22.0 million; stockholders� equity increased by $0.9 million (2.7%) and $2.1 million (6.9%), respectively, to $33.0 million; and, A Bank Owned Life Insurance (BOLI) asset was purchased in the second quarter, 2007 with a book value of $10.1 million. The Company's net interest income before its provision for loan losses was $4,215,000 in the second quarter of 2007, a decrease of 5.3% compared to $4,450,000 in the same period in 2006. The Company's net interest income before its provision for loan losses for the six months ended June 30, 2007 was $8,505,000, a decrease of 3.8% compared to $8,840,000 in the same period in 2006. The decrease in net interest income was primarily attributable to a narrowing net interest margin, partially offset by an increase in earning assets. The provision for loan losses was $54,000 in the second quarter of 2007 compared to $327,000 in the same period in 2006 and was a recovery of $32,000 for the six months ended June 30, 2007 compared to an expense of $470,000 in the same period in 2006. As of June 30, 2007 the Company had two nonaccrual loans totaling $1.9 million. In July 2007, one of these loans with a balance of $1.4 million paid off with full collection of principal, interest and fees. Noninterest income in the second quarter of 2007 was $746,000, a 16.7% increase compared to $639,000 in the same period in 2006. Noninterest income for the six months ended June 30, 2007 was $1,245,000, a 9.9% increase compared to $1,133,000 for the same period in 2006. The increases in noninterest income were primarily due to increases in Registered Investment Advisory Services fee income and income from the BOLI asset. Total noninterest expense in the second quarter of 2007 was $3,227,000, a 1.7 percent decrease compared to $3,282,000 for the same period in 2006. Total noninterest expense for the six months ended June 30, 2007 was $6,502,000, a 1.9 percent decrease compared to $6,623,000 for the same period in 2006. Personnel expenses have been controlled in the first half of 2007, as the Company has been able to grow its balance sheet while decreasing personnel expenses. �We are pleased that our earnings in the first six months of the year are up substantially from the prior year periods,� said Mark Garwood, President / CEO. �Although the Company has experienced pressure on its interest margin, we continued to grow our balance sheet in the second quarter. In addition, our ongoing efforts to control expenses have been successful. �We had a particularly strong quarterly growth in the loan portfolio while maintaining exceptionally strong asset quality. The larger of our two nonperforming loans paid off in early July with full collection of interest and fees, and we are well protected on the remaining $500,000 loan. �Epic Wealth Management is also contributing a greater amount to our financial results, as second quarter Registered Investment Advisory Services fee income increased 22.9% over the prior year and assets under management reached a record $282.8 million. �We expect net income to increase in the coming quarters through increased earning assets and assets under management combined with controlled operating expenses. We intend to leverage the infrastructure investments that we have made in prior years as both Tamalpais Bank and Epic Wealth Management are expected to gain market share with minimal increases in operating expenses.� 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 $522 million in assets and $370 million in deposits as of June 30, 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 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 � � June 30 December 31, 2007 2006 $Change %Change � (unaudited) Assets Cash and cash equivalents: � Cash and due from banks $ 4,512,133 $ 3,750,262 $ 761,871 20.3 % Federal funds sold � 876,818 � � 8,525,772 � � (7,648,954 ) -89.7 % Total Cash and Cash Equivalents 5,388,951 12,276,034 (6,887,083 ) -56.1 % Interest-bearing time deposits in other financial institutions 1,010,075 987,305 22,770 2.3 % � Investment securities Available-for-sale 35,045,850 26,515,887 8,529,963 32.2 % Held-to-maturity, at cost 17,529,106 21,823,305 (4,294,199 ) -19.7 % Federal Home Loan Bank restricted stock, at cost 4,890,300 5,891,900 (1,001,600 ) -17.0 % Pacific Coast Banker's Bank restricted stock, at cost 50,000 50,000 - 0.0 % Loans receivable 438,049,188 426,006,504 12,042,684 2.8 % Less: Allowance for loan losses � (4,594,462 ) � (4,671,596 ) � 77,134 � -1.7 % 433,454,726 421,334,908 12,119,818 2.9 % Bank premises and equipment, net 4,939,462 5,274,915 (335,453 ) -6.4 % Accrued interest receivable 3,103,207 3,297,170 (193,963 ) -5.9 % Cash surrender value of bank-owned life insurance 10,112,358 - 10,112,358 N/A Other assets � 6,258,303 � � 6,062,952 � � 195,351 � 3.2 % Total Assets $ 521,782,338 � $ 503,514,376 � $ 18,267,962 � 3.6 % � Liabilities and Stockholders' Equity Liabilities Deposits Noninterest-bearing deposits $ 21,995,688 $ 18,134,565 $ 3,861,123 21.3 % Interest-bearing checking deposits 7,196,860 8,432,730 (1,235,870 ) -14.7 % Money market and saving deposits 159,117,944 150,011,698 9,106,246 6.1 % Certificates of deposit greater than or equal to $100,000 114,422,954 129,011,093 (14,588,139 ) -11.3 % Certificates of deposit less than $100,000 � 66,982,078 � � 64,214,598 � � 2,767,480 � 4.3 % Total Deposits 369,715,524 369,804,684 (89,160 ) 0.0 % Federal Home Loan Bank Advances 102,631,928 86,250,777 16,381,151 19.0 % Junior Subordinated Debentures 13,403,000 13,403,000 - 0.0 % Accrued interest payable and other liabilities � 3,011,236 � � 3,175,055 � � (163,819 ) -5.2 % TotalLiabilities � 488,761,688 � � 472,633,516 � � 16,128,171 � 3.4 % � Commitment andContingencies - - - - � Stockholders' Equity Common stock, no par value; 10,000,000 shares authorized; 3,998,172 and 3,960,852 shares issued and outstanding at June 30, 2007 and December 31, 2006, respectively 10,483,454 10,384,816 98,638 0.9 % Paid-In-Capital 570,664 381,993 188,671 49.4 % Retained earnings 22,141,951 20,236,571 1,905,380 9.4 % Accumulated other comprehensive income/loss � (175,419 ) � (122,520 ) � (52,899 ) 43.2 % Total Stockholders' Equity � 33,020,650 � � 30,880,860 � � 2,139,790 � 6.9 % Total Liabilities and Stockholders' Equity $ 521,782,338 � $ 503,514,376 � $ 18,267,962 � 3.6 % EPIC BANCORP AND SUBSIDIARIESConsolidated Statements of IncomeFor the Periods Ended June 30, 2007 and 2006 � Three Months Ended Six Months Ended June 30, June 30, � 2007 � 2006 � � 2007 � � 2006 � (Unaudited) (Unaudited) Interest Income Interest and fees on loans $ 8,927,108 $ 8,225,153 $ 17,740,151 $ 15,676,678 Interest on investment securities 560,828 462,402 1,127,687 886,684 Interest on Federal funds sold 67,915 36,289 113,314 112,392 Interest on other investments 56,218 85,132 136,239 157,173 Interest on deposits in other financial institutions � 11,514 � 10,988 � � 22,770 � � 21,730 � Total Interest Income � 9,623,583 � 8,819,964 � � 19,140,161 � � 16,854,657 � � Interest Expense Interest expense on deposits 4,099,814 3,129,182 8,193,321 5,799,321 Interest expense on borrowed funds 1,013,515 1,008,929 1,857,484 1,769,188 Interest expense on Junior Subordinated Debentures � 295,493 � 231,721 � � 584,767 � � 446,380 � Total Interest Expense � 5,408,822 � 4,369,832 � � 10,635,572 � � 8,014,889 � Net Interest Income Before Provision for Loan Losses 4,214,761 4,450,132 8,504,589 8,839,768 Provision for Loan Losses � 10,155 � 327,319 � � (76,135 ) � 470,107 � Net Interest Income After Provision for Loan Losses � 4,204,606 � 4,122,813 � � 8,580,724 � � 8,369,661 � � Noninterest Income Gain on sale of loans, net 258,617 321,077 417,055 530,307 Loss on sale of securities, net - (1,820 ) - (1,820 ) Loan servicing 49,161 32,882 76,189 65,195 Registered Investment Advisory Services fee income 165,230 134,432 325,223 263,058 Other income � 272,514 � 152,851 � � 426,812 � � 276,483 � Total Noninterest Income � 745,522 � 639,422 � � 1,245,279 � � 1,133,223 � � Noninterest Expenses Salaries and benefits 1,831,452 2,160,477 3,734,495 4,167,674 Occupancy 369,793 355,557 718,140 696,532 Advertising 73,671 68,541 210,303 207,071 Professional 158,194 52,205 272,584 171,005 Data processing 93,060 89,058 204,385 196,038 Equipment and depreciation 217,873 197,722 417,143 384,590 Other administrative � 527,369 � 358,922 � � 989,245 � � 800,537 � Total Noninterest Expense � 3,271,412 � 3,282,482 � � 6,546,295 � � 6,623,447 � � Income Before Income Taxes 1,678,716 1,479,753 3,279,708 2,879,437 Provision for Income Taxes � 611,624 � 570,507 � � 1,194,688 � � 1,078,583 � Net Income $ 1,067,092 $ 909,246 � $ 2,085,020 � $ 1,800,854 � Earnings Per Share Basic $ 0.27 $ 0.23 � $ 0.52 � $ 0.46 � � Diluted $ 0.27 $ 0.23 � $ 0.52 � $ 0.45 � EPIC BANCORP AND SUBSIDIARIES Selected Ratios and Other DataUnaudited(Dollars in Thousands Except Per Share Amounts) � At or For the At or For the Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Profitability Ratios: Return on average assets 0.84 % 0.75 % 0.83 % 0.76 % Return on average equity 13.07 % 12.80 % 12.99 % 12.87 % Net Interest Margin 3.44 % 3.76 % 3.51 % 3.84 % Efficiency ratio 66.0 % 64.5 % 67.1 % 66.4 % � Other Information: Average total assets $ 510,302 $ 486,106 $ 504,725 $ 475,495 Average interest earning assets $ 491,076 $ 475,144 $ 488,863 $ 463,972 Average equity $ 32,670 $ 28,407 $ 32,113 $ 27,989 Average Basic Shares Outstanding 3,987,981 � 3,951,153 3,975,848 � 3,948,281 Average Diluted Shares Outstanding 4,026,941 � 3,995,370 � 4,015,945 � 3,967,875 Basic earnings per share $ 0.27 $ 0.23 $ 0.52 $ 0.46 Diluted earnings per share $ 0.27 $ 0.23 $ 0.52 $ 0.45 � At June 30, At December 31, 2007 2006 Share Information: Book value per share $ 8.26 $ 7.80 Shares outstanding 3,998,172 3,960,852 � Asset Quality Information: Non-performing loans $ 1,921 $ - Other real estate owned - - Allowance for loan losses $ 4,594 $ 4,672 Non-performing loans / total loans 0.44 % 0.00 % Non-performing assets / total assets 0.37 % 0.00 % Allowance for loan losses / loans outstanding 1.05 % 1.10 % Allowance for loan losses / non-accrual loans 239.17 % N/A � Tamalpais Bank Capital Ratios: Tier 1 leverage ratio 8.89 % 8.62 % Tier 1 risk based capital ratio 9.81 % 9.70 % Total risk based capital ratio 10.80 % 10.75 % EPIC BANCORP AND SUBSIDIARIES Average Balance Sheets (Unaudited) � For the Three Months Ended (dollars in thousands) 6/30/07 6/30/06 Interest Yields Interest Yields Average Income/ Earned/ Average Income/ Earned/ Balance Expense Paid Balance Expense Paid Assets Investment securities - taxable (1) $ 49,824 $ 561 4.52 % $ 46,838 $ 462 3.96 % Other investments 4,885 56 4.60 % 6,024 85 5.66 % Interest bearing deposits in other financial institutions 1,108 12 4.34 % 1,123 11 3.93 % Federal funds sold 5,065 68 5.38 % 2,926 36 4.93 % Loans (2) � 430,194 � � 8,927 8.32 % � 418,233 � � 8,225 7.89 % Total Interest Earning Assets 491,076 9,624 7.86 % 475,144 8,819 7.44 % Allowance for loan losses (4,612 ) (4,515 ) Cash and due from banks 4,200 4,915 Net premises, furniture and equipment 4,957 4,723 Other assets � 14,681 � � 5,839 � Total Assets $ 510,302 � $ 486,106 � � Liabilities and Shareholders' Equity Interest bearing checking $ 7,710 12 0.62 % $ 7,030 11 0.63 % Savings deposits (3) 157,971 1,775 4.51 % 160,968 1,575 3.92 % Time deposits 179,728 2,313 5.16 % 145,506 1,543 4.25 % Other borrowings 93,077 1,014 4.37 % 112,425 1,009 3.60 % Junior Subordinated Debentures � 13,403 � � 295 8.83 % � 10,826 � � 231 8.56 % Total Interest Bearing Liabilities 451,889 5,409 4.80 % 436,755 4,369 4.01 % Noninterest deposits 22,398 17,627 Other liabilities � 3,345 � � 3,317 � Total Liabilities 477,632 457,699 Shareholders' Equity � 32,670 � � 28,407 � Total Liabilities and Shareholders' Equity $ 510,302 � $ 486,106 � � � � Net interest income $ 4,215 $ 4,450 Net interest spread (4) 3.06 % 3.43 % Net interest margin (5) 3.44 % 3.76 % (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. EPIC BANCORP AND SUBSIDIARIESAverage Balance Sheets (Unaudited) � For the Six Months Ended (dollars in thousands) 6/30/07 6/30/06 Interest Yields Interest Yields Average Income/ Earned/ Average Income/ Earned/ Balance Expense Paid Balance Expense Paid Assets Investment securities - taxable (1) $ 49,859 $ 1,128 4.56 % $ 46,127 $ 887 3.88 % Other investments 5,078 136 5.40 % 6,064 157 5.22 % Interest bearing deposits in other financial institutions 1,067 23 4.35 % 1,122 22 3.95 % Federal funds sold 4,318 113 5.28 % 4,961 112 4.55 % Loans (2) � 428,541 � � 17,740 8.35 % � 405,698 � � 15,677 7.79 % Total Interest Earning Assets 488,863 19,140 7.90 % 463,972 16,855 7.33 % Allowance for loan losses (4,647 ) (4,397 ) Cash and due from banks 4,573 5,464 Net premises, furniture and equipment 5,027 4,699 Other assets � 10,909 � � 5,757 � Total Assets $ 504,725 � $ 475,495 � � Liabilities and Shareholders' Equity Interest bearing checking $ 7,814 24 0.62 % $ 7,062 22 0.63 % Savings deposits (3) 154,856 3,466 4.51 % 160,735 2,940 3.69 % Time deposits 184,014 4,703 5.15 % 141,930 2,838 4.03 % Other borrowings 88,613 1,857 4.23 % 106,256 1,769 3.36 % Junior Subordinated Debentures � 13,403 � � 585 8.80 % � 10,569 � � 446 8.51 % Total Interest Bearing Liabilities 448,700 10,635 4.78 % 426,552 8,015 3.79 % Noninterest deposits 20,259 17,609 Other liabilities � 3,653 � � 3,345 � Total Liabilities 472,612 447,506 Shareholders' Equity � 32,113 � � 27,989 � Total Liabilities and Shareholders' Equity $ 504,725 � $ 475,495 � � � � Net interest income $ 8,505 $ 8,840 Net interest spread (4) 3.12 % 3.54 % Net interest margin (5) 3.51 % 3.84 % � (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.