EPIK Epic Bancorp (MM)

Epic Bancorp (the �Company") (NASDAQ:EPIK), the parent company for Tamalpais Bank and Tamalpais Wealth Advisors, today reported record quarterly and full-year earnings. Net income for the quarter ended December 31, 2007 was $1,139,000, a 5.9% increase over net income of $1,076,000 for the same quarter ended in 2006. Quarterly diluted earnings per share of $0.30 increased 11.1% over the comparable period last year. Net income and earnings per share were both at record levels in the fourth quarter. Net income for 2007 was $4,209,000, a 7.1% increase over net income of $3,928,000 in 2006. Diluted earnings per share of $1.07 increased 8.1% over 2006. Net income and earnings per share were also at record levels for the full year in 2007. Per share results for 2007 have been restated for the 7% stock dividend paid February 14, 2007. Shares outstanding decreased by 121,216 shares in the fourth quarter and 196,216 shares for the full year due the ongoing stock repurchase plan. �We ended the year in a very strong position,� said Mark Garwood, President/CEO. �In the fourth quarter we had record revenue and our operating expenses were at their lowest level of the year, as we successfully executed our strategic plan to increase revenue while decreasing operating expenses. �In addition, our asset quality remains exceptional. We ended the year with just one $466,000 nonperforming loan, representing 0.08% of total assets, and recorded charge-offs of only $1,000 for the full year. We achieved double digit loan and asset growth in an increasingly difficult environment. We have never participated in subprime lending and have low exposure to residential mortgages, construction, and land loans.� For full year 2007: total assets increased by $53.3 million (10.6%) to $556.8 million; loans increased by $43.4 million (10.3%) to $464.7 million ; deposits decreased $8.6 million (2.3%) to $361.2 million; noninterest checking accounts increased by $5.1 million (28.2%) to $23.3 million; FHLB Borrowings increased by $60.3 million (69.9%) to $146.5 million, stockholders� equity increased by $2.1 million (6.6%) to $32.9 million; and, a bank owned life insurance (BOLI) asset was purchased in the second quarter, with a year-end book value of $10.4 million. �We were very successful in growing noninterest checking accounts this year, as our relationship focused approach to commercial and relationship banking is becoming increasingly successful. We chose not to compete for high rate retail deposits with banks affected by the mortgage market. Our FHLB borrowing capacity and other funding sources provide us with ample liquidity as we move into 2008.� For the quarter, net interest income before provision for loan losses increased 3.0% and noninterest income increased 42.7% over the same period in 2006. The interest margin was 3.47%, down from 3.59% from the fourth quarter of 2007. For the full year, net interest income before provision for loan losses decreased 0.4% and noninterest income increased 17.0% from 2006. The net interest margin was 3.50%, down from 3.71% from 2006. The provision for loan losses was $204,000 in the fourth quarter of 2007 compared to a provision of $38,000 in the same period in 2006. The provision for the full year was $244,000 as compared to $439,000 in 2006. The Company had one $466,000 nonperforming commercial real estate loan located in the Company�s primary market area. The loan is sixty days delinquent and the property is being marketed for sale. Due to the estimated loan-to-value ratio of less than 55% the Company does not expect to recognize a loss on this loan and anticipates recovering all principal and interest. Increases in Tamalpais Wealth Advisors assets under management produced fourth quarter and full year Registered Investment Advisory Services fee income increases of 21.8% and 18.6%, respectively, over the prior year periods. Fourth quarter and full year income from the bank owned life insurance asset totaled $138,000 and $387,000, respectively. That form of income was not recognized in the prior year. Total noninterest expense in the fourth quarter of 2007 was $3,267,000, a 4.8% increase compared to $3,118,000 for the same period in 2006. Total noninterest expense for the full year 2007 was $13,365,218, a 2.5% increase compared to the full year 2006. Company wide expense control measures have been put in place in 2007 to allow earning assets and revenue to increase at a faster pace than operating expenses. The Company�s stock buy-back program continued in the fourth quarter. During 2007 the Company repurchased 196,216 shares at a weighted average price of $12.51 per share. This is 97.8% of our targeted repurchase amount of 200,649 shares. In addition to the buy-back program, the Company�s Board of Directors has declared a cash dividend of $0.05 per share. The dividend will be paid on February 29, 2008 to shareholders of record as of February 15, 2008. The $0.05 dividend matches the previous dividend declared in October 2007 and is 11% higher than the $.045 dividend declared in July and April 2007. �We have retired approximately 4.9% or our outstanding shares in the third and fourth quarters,� said Garwood. �The stock buy-back program, along with our ongoing quarterly dividend and our strengthening financial performance, bode well for our future progress in executing our long term strategic plan to increase shareholder value.� About Epic Bancorp Epic Bancorp (www.epicbancorp.com) based in San Rafael, CA, is the parent company of Tamalpais Bank and Tamalpais Wealth Advisors. The Company had $557 million in assets and $361 million in deposits as of December 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 loan production offices in Santa Rosa and Roseville, CA. The branches are located in Corte Madera, Greenbrae, Mill Valley, San Anselmo, San Rafael, Terra Linda, and Tiburon/Belvedere. About Tamalpais Wealth Advisors Tamalpais Wealth Advisors, located in San Rafael, specializes in helping clients of Tamalpais Bank and other high net worth families and institutional clients reach their financial goals through a collaborative, comprehensive and education-oriented approach to investment management. Tamalpais Wealth Advisors had $281 million in assets under management as of December 31, 2007. 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 Tamalpais Wealth Advisors . 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 � � � � � December 31,2007 December 31,2006 $ Change % Change (unaudited) Assets Cash and cash equivalents: Cash and due from banks $ 4,457,959 $ 3,750,262 $ 707,697 18.9 % Federal funds sold � 566,541 � � 8,525,772 � � (7,959,231 ) -93.4 % Total Cash and Cash Equivalents 5,024,500 12,276,034 (7,251,534 ) -59.1 % Interest-bearing time deposits in other financial institutions 627,387 987,305 (359,918 ) -36.5 % � Investment securities Available-for-sale 40,660,856 26,515,887 14,144,969 53.3 % Held-to-maturity, at cost 14,514,528 21,823,305 (7,308,777 ) -33.5 % Federal Home Loan Bank restricted stock, at cost 6,885,900 5,891,900 994,000 16.9 % Pacific Coast Banker's Bank restricted stock, at cost 50,000 50,000 - 0.0 % Loans receivable 469,613,486 426,006,504 43,606,982 10.2 % Less: Allowance for loan losses � (4,914,553 ) � (4,671,596 ) � (242,957 ) 5.2 % 464,698,933 421,334,908 43,364,025 10.3 % Bank premises and equipment, net 4,653,871 5,274,915 (621,044 ) -11.8 % Accrued interest receivable 3,221,249 3,297,170 (75,921 ) -2.3 % Cash surrender value of bank-owned life insurance 10,387,374 - 10,387,374 N/A Other assets � 6,090,187 � � 6,062,952 � � 27,235 � 0.4 % Total Assets $ 556,814,785 � $ 503,514,376 � $ 53,300,409 � 10.6 % � Liabilities and Stockholders' Equity Liabilities Deposits Noninterest-bearing deposits 23,254,723 $ 18,134,565 $ 5,120,158 28.2 % Interest-bearing checking deposits 6,874,465 8,432,730 (1,558,265 ) -18.5 % Money market and saving deposits 138,275,392 150,011,698 (11,736,306 ) -7.8 % Certificates of deposit greater than or equal to $100,000 110,587,625 129,011,093 (18,423,468 ) -14.3 % Certificates of deposit less than $100,000 � 82,182,492 � � 64,214,598 � � 17,967,894 � 28.0 % Total Deposits 361,174,697 369,804,684 (8,629,987 ) -2.3 % Federal Home Loan Bank Advances 146,507,500 86,250,777 60,256,723 69.9 % Junior Subordinated Debentures 13,403,000 13,403,000 - 0.0 % Accrued interest payable and other liabilities � 2,797,051 � � 3,175,055 � � (378,004 ) -11.9 % Total Liabilities � 523,882,248 � � 472,633,516 � � 51,248,731 � 10.8 % � Commitment and Contingencies - - - - � Stockholders' Equity Common stock, no par value; 10,000,000 shares authorized; 3,818,284 and 3,960,852 shares issued and outstanding at December 31, 2007 and December 31, 2006, respectively 8,177,327 10,384,816 (2,207,489 ) -21.3 % Paid-In-Capital 663,213 381,993 281,220 73.6 % Retained earnings 23,884,813 20,236,571 3,648,242 18.0 % Accumulated other comprehensive income/loss � 207,184 � � (122,520 ) � 329,704 � -269.1 % Total Stockholders' Equity � 32,932,537 � � 30,880,860 � � 2,051,677 � 6.6 % Total Liabilities and Stockholders' Equity $ 556,814,785 � $ 503,514,376 � $ 53,300,409 � 10.6 % � EPIC BANCORP AND SUBSIDIARIESConsolidated Statements of IncomeFor the Periods Ended December 31, 2007 and 2006 � � � � Three Months EndedDecember 31, Twelve Months EndedDecember 31, 2007 2006 2007 2006 (Unaudited) (Unaudited) Interest Income Interest and fees on loans $ 9,145,725 $ 8,875,154 $ 36,096,493 $ 33,228,862 Interest on investment securities 665,062 513,408 2,450,353 1,902,396 Interest on Federal funds sold 23,630 113,506 161,022 314,126 Interest on other investments 91,218 102,905 293,064 324,485 Interest on deposits in other financial institutions � 7,898 � 11,372 � 40,081 � 44,342 � Total Interest Income � 9,933,533 � 9,616,345 � 39,041,013 � 35,814,211 � Interest Expense Interest expense on deposits 3,667,934 4,062,260 15,797,174 13,507,085 Interest expense on borrowed funds 1,488,225 851,284 4,561,481 3,636,467 Interest expense on Junior Subordinated Debentures � 236,533 � 292,105 � 1,123,231 � 1,040,962 � Total Interest Expense � 5,392,692 � 5,205,649 � 21,481,886 � 18,184,514 � Net Interest Income Before Provision for Loan Losses 4,540,841 4,410,696 17,559,127 17,629,697 Provision for Loan Losses � 203,671 � 38,163 � 243,956 � 439,472 � Net Interest Income After Provision for Loan Losses � 4,337,170 � 4,372,533 � 17,315,171 � 17,190,225 � Noninterest Income Gain on sale of loans, net 98,875 48,300 584,748 791,966 Loss on sale of securities, net - - - (1,820 ) Loan servicing 52,189 52,162 179,422 161,142 Registered Investment Advisory Services fee income 161,871 132,920 601,429 507,192 Other income � 379,203 � 251,803 � 1,180,409 � 717,977 � Total Noninterest Income � 692,138 � 485,185 � 2,546,008 � 2,176,457 � Noninterest Expenses Salaries and benefits 1,768,097 1,843,608 7,335,918 7,934,800 Occupancy 367,269 351,642 1,468,659 1,409,557 Advertising 62,962 75,731 369,291 367,768 Professional 385,403 44,353 738,090 337,172 Data processing 118,912 64,133 469,495 364,223 Equipment and depreciation 230,583 246,246 900,072 850,820 Other administrative � 333,759 � 492,143 � 2,083,693 � 1,771,318 � Total Noninterest Expense � 3,266,985 � 3,117,856 � 13,365,218 � 13,035,658 � � Income Before Income Taxes 1,762,323 1,739,862 6,495,961 6,331,024 Provision for Income Taxes � 622,878 � 664,359 � 2,286,847 � 2,402,575 � Net Income $ 1,139,445 $ 1,075,503 $ 4,209,114 $ 3,928,449 � Earnings Per Share Basic $ 0.30 $ 0.27 $ 1.07 $ 0.99 � � Diluted $ 0.30 $ 0.27 $ 1.07 $ 0.99 � � EPIC BANCORP AND SUBSIDIARIESSelected Ratios and Other DataUnaudited(Dollars in Thousands Except Per Share Amounts) � � � � At or For theThree Months EndedDecember 31, At or For theTwelve Months EndedDecember 31, 2007 2006 2007 2006 Profitability Ratios: Return on average assets 0.84 % 0.86 % 0.81 % 0.81 % Return on average equity 13.89 % 14.67 % 12.89 % 13.81 % Net Interest Margin 3.47 % 3.59 % 3.50 % 3.71 % Efficiency ratio 62.4 % 63.7 % 66.5 % 65.8 % � Other Information: Average total assets $ 541,643 $ 499,504 $ 520,438 $ 486,652 Average interest earning assets $ 519,221 $ 487,899 $ 501,250 $ 475,841 Average equity $ 32,823 $ 29,330 $ 32,660 $ 28,446 Average Basic Shares Outstanding 3,853,976 � 3,960,852 3,950,540 � 3,951,794 Average Diluted Shares Outstanding 3,803,190 � 3,960,441 � 3,951,791 � 3,961,501 Basic earnings per share $ 0.30 $ 0.27 $ 1.07 $ 0.99 Diluted earnings per share $ 0.30 $ 0.27 $ 1.07 $ 0.99 � At December 31,2007 At December 31,2006 Share Information: Book value per share $ 8.62 $ 7.79 Shares outstanding 3,818,284 3,960,852 � Asset Quality Information: Non-performing loans $ 466 $ - Other real estate owned - - Allowance for loan losses $ 4,915 $ 4,672 Non-performing loans / total loans 0.10 % 0.00 % Non-performing assets / total assets 0.08 % 0.00 % Allowance for loan losses / loans outstanding 1.05 % 1.10 % Allowance for loan losses / non-accrual loans 1054.63 % N/A � Tamalpais Bank Capital Ratios: Tier 1 leverage ratio 8.33 % 8.62 % Tier 1 risk based capital ratio 9.35 % 9.70 % Total risk based capital ratio 10.37 % 10.75 % EPIC BANCORP AND SUBSIDIARIESAverage Balance Sheets (Unaudited) � � � � � � For the Three Months Ended (dollars in thousands) 12/31/07 � 12/31/06 � AverageBalance InterestIncome/Expense YieldsEarned/Paid AverageBalance InterestIncome/Expense YieldsEarned/Paid Assets Investment securities - Muni's (1,2) $ 5,239 $ 52 5.56 % $ - $ - N/A Investment securities - taxable (2) 50,231 613 4.84 % 46,444 513 4.38 % Other investments 6,106 91 5.91 % 5,957 103 6.86 % Interest bearing deposits in other financial institutions 682 8 4.65 % 1,108 11 3.94 % Federal funds sold 1,789 24 5.32 % 8,590 114 5.27 % Loans (3) � 455,174 � � 9,146 7.97 % � 425,800 � � 8,875 8.27 % Total Interest Earning Assets 519,221 9,934 7.59 % 487,899 9,616 7.82 % Allowance for loan losses (4,736 ) (4,654 ) Cash and due from banks 4,542 5,765 Net premises, furniture and equipment 4,788 5,191 Other assets � 17,828 � � 5,303 � Total Assets $ 541,643 � $ 499,504 � � Liabilities and Shareholders' Equity Interest bearing checking $ 7,062 $ 11 0.62 % $ 7,497 $ 12 0.64 % Savings deposits (4) 143,406 1,194 3.30 % 148,650 1,624 4.33 % Time deposits 189,151 2,463 5.17 % 191,266 2,426 5.03 % Other borrowings 129,512 1,488 4.56 % 87,610 851 3.85 % Junior Subordinated Debentures � 13,403 � � 237 7.02 % � 13,403 � � 292 8.64 % Total Interest Bearing Liabilities 482,534 5,393 4.43 % 448,426 5,205 4.61 % Noninterest deposits 21,631 18,208 Other liabilities � 4,655 � � 3,540 � Total Liabilities 508,820 470,174 Shareholders' Equity � 32,823 � � 29,330 � Total Liabilities and Shareholders' Equity $ 541,643 � $ 499,504 � � � Net interest income $ 4,541 $ 4,411 Net interest spread (5) 3.16 % 3.21 % Net interest margin (6) 3.47 % 3.59 % � (1) Yields on securities and certain loans have been adjusted upward to a "fully taxable equivalent" ("FTE") basis in order to reflect the effect of��income which is exempt from federal income taxation at the current statutory tax rate. (2)�The yields for securities were computed using the average amortized cost and therefore do not give effect for changes in fair value. (3)�Loans, net of unearned income, include non-accrual loans but do not reflect average reserves for possible loan losses. (4)�Savings deposits include Money Market accounts. (5)�Net interest spread is the interest differential between total interest earning assets and total interest-bearing liabilities. (6)�Net interest margin is the net yield on average interest earning assets. � EPIC BANCORP AND SUBSIDIARIESAverage Balance Sheets (Unaudited) � � � � � � For the Twelve Months Ended (dollars in thousands) 12/31/07 � 12/31/06 � AverageBalance InterestIncome/Expense YieldsEarned/Paid AverageBalance InterestIncome/Expense YieldsEarned/Paid Assets Investment securities - Muni's (1,2) $ 3,116 $ 123 5.57 % $ - $ - N/A Investment securities - taxable (2) 49,496 2,327 4.70 % 46,893 1,902 4.06 % Other investments 5,348 293 5.48 % 6,035 324 5.37 % Interest bearing deposits in other financial institutions 899 40 4.45 % 1,167 44 3.77 % Federal funds sold 3,129 161 5.15 % 6,378 314 4.92 % Loans (3) � 439,262 � � 36,097 8.22 % � 415,368 � � 33,230 8.00 % Total Interest Earning Assets 501,250 39,041 7.79 % 475,841 35,814 7.53 % Allowance for loan losses (4,663 ) (4,528 ) Cash and due from banks 4,425 5,377 Net premises, furniture and equipment 4,998 4,927 Other assets � 14,426 � � 5,035 � Total Assets $ 520,436 � $ 486,652 � � Liabilities and Shareholders' Equity Interest bearing checking $ 7,513 46 0.61 % $ 7,301 45 0.62 % Savings deposits (4) 153,199 6,336 4.14 % 155,426 6,176 3.97 % Time deposits 183,671 9,415 5.13 % 161,739 7,286 4.50 % Other borrowings 103,088 4,562 4.43 % 101,051 3,636 3.60 % Junior Subordinated Debentures � 15,135 � � 1,123 7.42 % � 11,524 � � 1,041 9.03 % Total Interest Bearing Liabilities 462,606 21,482 4.64 % 437,041 18,184 4.16 % Noninterest deposits 20,764 17,874 Other liabilities � 4,408 � � 3,291 � Total Liabilities 487,778 458,206 Shareholders' Equity � 32,660 � � 28,446 � Total Liabilities and Shareholders' Equity $ 520,438 � $ 486,652 � � � Net interest income $ 17,559 $ 17,630 Net interest spread (5) 3.15 % 3.37 % Net interest margin (6) 3.50 % 3.71 % � (1) Yields on securities and certain loans have been adjusted upward to a "fully taxable equivalent" ("FTE") basis in order to reflect the effect of income which is exempt from federal income taxation at the current statutory tax rate. (2) The yields for securities were computed using the average amortized cost and therefore do not give effect for changes in fair value. (3) Loans, net of unearned income, include non-accrual loans but do not reflect average reserves for possible loan losses. (4) Savings deposits include Money Market accounts. (5) Net interest spread is the interest differential between total interest earning assets and total interest-bearing liabilities. (6) Net interest margin is the net yield on average interest earning assets.