Epic Bancorp (MM) (NASDAQ:EPIK)
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From May 2019 to May 2024
Epic Bancorp (the “Company") (NASDAQ:EPIK),
the parent company for Tamalpais Bank and Tamalpais Wealth Advisors,
today reported record quarterly earnings. Net income for the quarter
ended March 31, 2008 was $1,227,000, a 20.6% increase over net income of
$1,018,000 for the like quarter of 2007. Quarterly diluted earnings per
share of $0.32 increased 28.0% over the comparable period last year.
On a sequential quarter basis, net income increased 7.8% and diluted
earnings per share increased 6.7% over the fourth quarter of 2007. Per
share results for 2007 have been restated for the 7% stock dividend paid
February 14, 2007 and reflected the repurchase of 4.9% of the
outstanding shares in the fourth quarter of 2007.
"Our performance in the first quarter was remarkable,”
said Mark Garwood, President/CEO. “The
combination of robust loan portfolio growth, clean asset quality,
widening interest margin, and record earnings place us in a strong
position for future growth and investment in our key business units.”
“We continued to focus on commercial and
relationship banking centered on our emerging Marin County commercial
banking team and our established small business lending team throughout
the greater Bay Area.”
The total assets of the Company increased to $601.7 million as of March
31, 2008, up $44.9 million (8.1%) from $556.8 million as of December 31,
2007. For the three months ended March 31, 2008:
net loans increased by $32.6 million (7.0%) to $497.3 million;
deposits increased by $34.5 million (9.6%) to $395.7 million;
checking accounts increased by $1.3 million (4.2%) to $31.4 million;
investments increased by $4.5 million (8.1%) to $59.6 million;
FHLB Borrowings increased by $4.6 million (3.1%) to $151.1 million;
and,
stockholders’ equity increased by $1.4
million (4.2%) to $34.3 million.
For the quarter, net interest income before provision for loan losses
increased by $782,000 (18.2%). The net interest margin widened to 3.71%,
up from 3.58% in the first quarter of 2007 and 3.47% from the fourth
quarter of 2007. In the first quarter of 2008 the Company significantly
lowered its cost of funds to 4.05%, down from 4.76% in the first quarter
of 2007 and 4.43% in the fourth quarter of 2007. The Company benefited
from the ongoing decreases in the Federal funds and discount rates
through lower funding costs while asset yields remained relatively high
due to the pricing structure of loans with floors, initial fixed rates,
and prepayment penalties.
Based on the increase in the loan portfolio, the provision for loan
losses was $345,000 in the first quarter of 2008 compared to a net
recovery of the provision of $86,000 in the first quarter of 2007, for
an increase of $431,000. The allowance for loan losses was 1.05% of
loans receivable as of March 31, 2008, unchanged from the prior year.
The Company had three nonperforming loans at quarter end totaling
$1,029,000, with an unguaranteed balance of $614,000. Included in this
amount is a 90 day delinquent $466,000 commercial real estate loan
located in Marin County that paid off on April 23rd
2008 with full collection of principal, interest, and late charges. Also
included in nonperforming loans were a 30 day delinquent $553,000 SBA 7A
loan that is 75% guaranteed by the SBA, and a $10,000 consumer line of
credit. The Company is working closely with the SBA 7A loan borrower.
Nonperforming loans were 0.20% of total loans and the unguaranteed
balance of nonperforming loans was 0.12% of total loans at quarter end.
“Our long history of diligent, fully
documented underwriting while providing flexible lending products
tailored to fit our customers’ needs has
allowed us to maintain a near pristine credit quality and an attractive
loan yield. We had no loan charge offs in the quarter, after a total of
only $1,000 in charge-offs over the preceding ten years. We have never
participated in subprime lending and have low exposure to residential
mortgages, construction, and land loans. These categories, in total,
comprise just 10.9% of the loan portfolio. Although we have entered a
period of economic weakness we believe that our outstanding credit
culture and ample allowance for loan losses will minimize the financial
impact of any potential deterioration in asset quality.”
Noninterest income increased $164,000 (32.9%) from the first quarter of
2007 to $664,000. Other income, primarily related to fees generated from
retail and commercial banking operations and the Bank Owned Life
Insurance asset purchased in April 2007, increased by $151,000 (97.7%)
to account for much of this increase.
In the first quarter of 2008 the Company sold $7.3 million of 504 SBA
commercial real estate loans secured by first deeds of trust. The
proceeds from the sale were used to purchase short duration GNMA
securities. The sale of these loans generated a gain of $166,000 versus
gains of $158,000 in the first quarter of 2007 and $99,000 in the fourth
quarter of 2007. There may be periods in the coming quarters where no
loan sales occur.
Total noninterest expense in the first quarter of 2008 was $3,636,000, a
$362,000 (11.0%) increase compared to $3,275,000 for the same period in
2007. Salaries and benefits increased $308,000 (16.8%) due primarily to
planned increases in staff. The Company has expanded its staff and
management in the first quarter to strengthen its commercial and small
business banking operations.
Income tax provision for the first quarter of 2008 amounted to $526,000,
a decrease of $57,000 (9.7%) over the same period in 2007. The effective
tax rate in the first quarter of 2007 was 30.0% compared to 36.4% in the
first quarter of 2007. The Company has lowered its effective tax rate
through tax benefits associated with Bank Owned Life Insurance, tax
credits associated with Affordable Housing Fund investments, municipal
securities, and lending in Enterprise Zones.
“We are well positioned to capitalize on
growth opportunities in the markets we serve. We enter the second
quarter with a strong and growing balance sheet. We have also fortified
Tamalpais Bank’s capital position through the
recently obtained $5 million credit facility. We are in the process of
rounding out our seasoned team of commercial and small business banking
professionals and we expect continued success in loan and deposit growth
as we increase our commercial banking market share.”
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 $601 million in assets and
$396 million in deposits as of March 31, 2008. 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 $279 million in
assets under management as of March 31, 2008.
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 SUBSIDIARIES
Consolidated Balance Sheets
March 31
December 31,
2008
2007
$ Change
% Change
(unaudited)
Assets
Cash and cash equivalents:
Cash and due from banks
$
4,068,057
$
4,457,959
$
(389,902
)
-8.7
%
Federal funds sold
7,775,008
566,541
7,208,467
1272.4
%
Total Cash and Cash Equivalents
11,843,065
5,024,500
6,818,565
135.7
%
Interest-bearing time deposits in other financial institutions
635,298
627,387
7,911
1.3
%
Investment securities
Available-for-sale
45,900,546
40,660,856
5,239,690
12.9
%
Held-to-maturity, at cost
13,739,584
14,514,528
(774,944
)
-5.3
%
Federal Home Loan Bank restricted stock, at cost
7,561,100
6,885,900
675,200
9.8
%
Pacific Coast Banker's Bank restricted stock, at cost
50,000
50,000
-
0.0
%
Loans receivable
502,559,173
469,613,486
32,945,687
7.0
%
Less: Allowance for loan losses
(5,259,652
)
(4,914,553
)
(345,099
)
7.0
%
497,299,521
464,698,933
32,600,588
7.0
%
Bank premises and equipment, net
4,466,861
4,653,871
(187,010
)
-4.0
%
Accrued interest receivable
3,374,848
3,221,249
153,599
4.8
%
Cash surrender value of bank-owned life insurance
10,517,465
10,387,374
130,091
1.3
%
Other assets
6,304,050
6,090,187
213,863
3.5
%
Total Assets
$
601,692,338
$
556,814,785
$
44,877,553
8.1
%
Liabilities and Stockholders' Equity
Liabilities
Deposits
Noninterest-bearing deposits
24,264,606
23,254,723
$
1,009,883
4.3
%
Interest-bearing checking deposits
7,143,047
6,874,465
268,582
3.9
%
Money market and saving deposits
146,923,125
138,275,392
8,647,733
6.3
%
Certificates of deposit greater than or equal to $100,000
124,408,744
110,587,625
13,821,119
12.5
%
Certificates of deposit less than $100,000
92,976,827
82,182,492
10,794,335
13.1
%
Total Deposits
395,716,349
361,174,697
34,541,652
9.6
%
Federal Home Loan Bank Advances
151,085,000
146,507,500
4,577,500
3.1
%
Long term debt
3,000,000
-
3,000,000
N/A
Junior Subordinated Debentures
13,403,000
13,403,000
-
0.0
%
Accrued interest payable and other liabilities
4,172,788
2,797,051
1,375,737
49.2
%
Total Liabilities
567,377,137
523,882,248
43,494,889
8.3
%
Commitment and Contingencies
-
-
-
-
Stockholders' Equity
Common stock, no par value; 10,000,000 shares authorized;
3,818,284 issued and outstanding March 31, 2008 and December 31,
2007
11,977,473
11,977,473
-
0.0
%
Paid-In-Capital
741,846
663,213
78,633
11.9
%
Retained earnings
21,130,786
20,084,667
1,046,119
5.2
%
Accumulated other comprehensive income/loss
465,096
207,184
257,912
124.5
%
Total Stockholders' Equity
34,315,201
32,932,537
1,382,664
4.2
%
Total Liabilities and Stockholders' Equity
$
601,692,338
$
556,814,785
$
44,877,553
8.1
%
EPIC BANCORP AND SUBSIDIARIES
Consolidated Statements of Income
For the Periods Ended March 31, 2008 and 2007
Three Months Ended
March 31,
$ Change
% Change
2008
2007
(Unaudited)
Interest Income
Interest and fees on loans
$
9,435,557
$
8,813,046
$
622,511
7.1
%
Interest on investment securities
646,927
566,859
80,068
14.1
%
Interest on Federal funds sold
40,718
45,398
(4,680
)
-10.3
%
Interest on other investments
93,036
80,021
13,015
16.3
%
Interest on deposits in other financial institutions
7,911
11,256
(3,345
)
-29.7
%
Total Interest Income
10,224,149
9,516,580
707,569
7.4
%
Interest Expense
Interest expense on deposits
3,353,822
4,093,507
(739,685
)
-18.1
%
Interest expense on borrowed funds
1,596,832
843,970
752,862
89.2
%
Interest expense on Junior Subordinated Debentures
202,135
289,274
(87,139
)
-30.1
%
Total Interest Expense
5,152,789
5,226,751
(73,962
)
-1.4
%
Net Interest Income Before Provision for Loan Losses
5,071,360
4,289,829
781,531
18.2
%
Provision for Loan Losses
345,099
(86,289
)
431,388
-499.9
%
Net Interest Income After Provision for Loan Losses
4,726,261
4,376,118
350,143
8.0
%
Noninterest Income
Gain on sale of loans, net
166,293
158,438
7,855
5.0
%
Loan servicing
35,759
27,027
8,732
32.3
%
Registered Investment Advisory Services fee income
156,847
159,993
(3,146
)
-2.0
%
Other income
305,043
154,299
150,744
97.7
%
Total Noninterest Income
663,942
499,757
164,185
32.9
%
Noninterest Expenses
Salaries and benefits
2,143,401
1,835,814
307,587
16.8
%
Occupancy
355,443
348,347
7,096
2.0
%
Advertising
78,345
136,631
(58,286
)
-42.7
%
Professional
110,346
114,390
(4,044
)
-3.5
%
Data processing
120,926
111,325
9,601
8.6
%
Equipment and depreciation
220,967
199,270
21,697
10.9
%
Other administrative
606,971
529,105
77,866
14.7
%
Total Noninterest Expense
3,636,399
3,274,882
361,517
11.0
%
Income Before Income Taxes
1,753,804
1,600,993
152,811
9.5
%
Provision for Income Taxes
526,481
583,064
(56,583
)
-9.7
%
Net Income
$
1,227,323
$
1,017,929
$
209,394
20.6
%
Earnings Per Share
Basic
$
0.32
$
0.26
$
0.06
23.1
%
Diluted
$
0.32
$
0.25
$
0.07
28.0
%
EPIC BANCORP AND SUBSIDIARIES
Selected Ratios and Other Data
Unaudited
(Dollars in Thousands Except Per Share Amounts)
At or For the
Three Months Ended
March 31,
2008
2007
Profitability Ratios:
Return on average assets
0.86%
0.83%
Return on average equity
14.72%
13.09%
Net Interest Margin
3.71%
3.58%
Efficiency ratio
63.4%
68.4%
Other Information:
Average total assets
$
571,956
$
498,973
Average interest earning assets
$
549,722
$
486,627
Average equity
$
33,542
$
31,547
Average Basic Shares Outstanding
3,818,284
3,963,581
Average Diluted Shares Outstanding
3,778,826
4,153,390
Basic earnings per share
$
0.32
$
0.26
Diluted earnings per share
$
0.32
$
0.25
At March 31,
At December 31,
2008
2007
Share Information:
Book value per share
$
8.99
$
8.62
Shares outstanding
3,818,284
3,818,284
Asset Quality Information:
Non-performing loans
$
1,029
$
466
Other real estate owned
-
-
Allowance for loan losses
$
5,260
$
4,915
Non-performing loans /
total loans
0.20%
0.10%
Non-performing assets /
total assets
0.17%
0.08%
Allowance for loan losses /
loans outstanding
1.05%
1.05%
Allowance for loan losses /
non-accrual loans
511.14%
1054.63%
Tamalpais Bank Capital Ratios:
Tier 1 leverage ratio
8.55%
8.33%
Tier 1 risk based capital ratio
9.35%
9.15%
Total risk based capital ratio
10.26%
10.15%
Net Loans Outstanding:
At March 31,
At December 31,
2008
2007
AMOUNT
%
AMOUNT
%
(Dollars in thousands)
One-to-four family residential
$
17,484
3.5
%
$
22,098
4.7
%
Multifamily residential
142,004
28.3
123,077
26.2
Commercial real estate
278,774
55.5
246,257
52.4
Land
10,836
2.2
9,369
2.0
Construction real estate
25,689
5.1
28,988
6.2
Consumer loans
2,521
0.5
2,045
0.4
Commercial, non real estate
23,651
4.7
36,250
7.7
Total gross loans
500,959
99.7
468,084
99.7
Net deferred loan costs
1,640
0.3
1,529
0.3
Total loans receivable, net of deferred loan costs
$
502,599
100.0
%
$
469,613
100.0
%
EPIC BANCORP AND SUBSIDIARIES
Average Balance Sheets (Unaudited)
For the Three Months Ended
(dollars in thousands)
3/31/08
3/31/07
Interest
Yields
Interest
Yields
Average
Income/
Earned/
Average
Income/
Earned/
Balance
Expense
Paid
Balance
Expense
Paid
Assets
Investment securities - Muni's (1,2)
$
6,360
$
21
5.43
%
$
-
$
-
N/A
Investment securities - taxable (2)
48,396
626
5.20
%
$
49,896
567
4.61
%
Other investments
7,397
93
5.06
%
5,274
80
6.15
%
Interest bearing deposits in other financial institutions
637
8
5.05
%
1,025
11
4.35
%
Federal funds sold
5,230
41
3.15
%
3,563
45
5.12
%
Loans (3)
481,702
9,435
7.88
%
426,869
8,813
8.37
%
Total Interest Earning Assets
549,722
10,224
7.48
%
486,627
9,516
7.93
%
Allowance for loan losses
(4,986
)
(4,683
)
Cash and due from banks
4,074
4,840
Net premises, furniture and equipment
4,593
5,097
Other assets
18,553
7,092
Total Assets
$
571,956
$
498,973
Liabilities and Shareholders' Equity
Interest bearing checking
$
6,753
$
10
0.60
%
$
7,919
$
12
0.61
%
Savings deposits (4)
140,217
917
2.63
%
151,706
1,691
4.52
%
Time deposits
201,838
2,427
4.84
%
188,348
2,390
5.15
%
Other borrowings
149,927
1,597
4.28
%
84,100
844
4.07
%
Long term debt
33
-
0.00
%
-
-
N/A
Junior Subordinated Debentures
13,403
202
6.06
%
13,403
289
8.74
%
Total Interest Bearing Liabilities
512,171
5,153
4.05
%
445,476
5,226
4.76
%
Noninterest deposits
22,741
17,985
Other liabilities
3,502
3,965
Total Liabilities
538,414
467,426
Shareholders' Equity
33,542
31,547
Total Liabilities and Shareholders' Equity
$
571,956
$
498,973
Net interest income
$
5,071
$
4,290
Net interest spread (5)
3.43
%
3.17
%
Net interest margin (6)
3.71
%
3.58
%
(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.