Epic Bancorp Announces Quarterly Financial Results; Record Quarterly and Full Year Earnings

Business Wire, Jan 23, 2008

Declares $0.05 Per Share First Quarter Dividend

SAN RAFAEL, Calif. -- 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.