Epic Bancorp Announces Quarterly Financial Results Net Income Increases by 17.4%

Business Wire, July 23, 2007

SAN RAFAEL, Calif. -- In the third table titled "Selected Ratios and Other Data," the line "Average Diluted Shares Outstanding" under "At or For the Three Months Ended June 30, 2007," figure should read 4,024,650 (sted 4,026,941).

The corrected release reads:

EPIC BANCORP ANNOUNCES QUARTERLY FINANCIAL RESULTS NET INCOME INCREASES BY 17.4%

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."