Epic Bancorp (MM) (NASDAQ:EPIK)
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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.