AMERICAN BUSINESS BANK Announces Record Growth in Net Loans - American Business Bank (OTC:AMBZ)

Total Assets reach over $2 Billion

AMERICAN BUSINESS BANK AMBZ today reported net income of $3.7 million for the quarter ended June 30, 2018, or $.48 per diluted share compared to net income of $2.4 million or $.31 per diluted share for the first quarter of 2018. The increase in net income was primarily due to an increase in net interest income in addition to an increase in the gain on sale of SBA loans with a reduction to normalized compensation expense.

Net interest income increased by $850 thousand or 6% to $15.8 million for the second quarter of 2018 compared to $15 million for the first quarter of 2018. This quarterly increase represents a 23% annualized growth rate in net interest income.

Total assets increased $148 million, or 16% annualized from year end December 31, 2017 to $2.0 billion. This was driven by an increase in deposits of $168 million, or 21% annualized growth from year end. Total loans increased $173 million to $1.1 billion, or 38% annualized growth from year end. This resulted in an increase in the loan to deposit ratio to 60% from 56% during the year. In the second quarter of 2018, the Bank grew loans by $94 million and deposits by $80 million. At June 30, 2018, non-interest bearing deposits represented 50% of total deposits.

"This double digit growth again surpassed our expectations. Although the investment we have made in hiring seasoned banking personnel has been a drag on earnings in the first half of the year, the shift to higher earning assets coupled with core deposit growth places the Bank in the right direction for the future," said Leon Blankstein, ABB's President, CEO and Director.

From a year ago, total assets increased $244 million or 14%, from June 30, 2017. This was driven by an increase in deposits of $214 million, or 13% over the twelve months. Total loans increased $209 million, or 24% from a year ago. This resulted in an increase in the loan to deposit ratio to 60% from 55% a year ago.

Asset quality at June 30, 2018 remains excellent with non-performing assets to total assets of 0.10%, $2.1 million in non-performing loans, and no Other Real Estate Owned (OREO). At the end of the quarter, the allowance for loan losses stood at $15.4 million, or 1.41% of total loans. For 2018 year to date, the Bank had a recovery of $30,000.

"We are pleased with the quality of the new loan production as well as the even blend of C&I and real estate loans. As always, we are committed to growing with prudent underwriting as we have done since the beginning of the Bank twenty years ago. With the opportunities in our market place, the Bank prefers to focus its earning assets on organic loan growth over increasing the investment portfolio," said Patti Vollmer, Executive Vice President and Chief Credit Officer.

Net Interest Income increased due to an increase in average outstanding loans, a higher yield on loans and a low deposit beta for the current quarter over the prior quarter. The yield on average loans increased to 4.55% for the second quarter of 2018 compared to 4.46% for the first quarter of 2018. The new loan production weighted average coupon was 4.88% in the quarter. The Bank's core deposits continue to be a strength with the cost of deposits at 14 bps for the most recent quarter. Thus, net interest margin in the second quarter increased to 3.35% compared to 3.28% in the first quarter.

Non-Interest Income increased $567,000 quarter over quarter primarily as the Bank recorded a gain on sale of SBA loans of $491,000 generated by the new SBA group.

Non-Interest Expense decreased $537,000 for the quarter ending June 30, 2018 compared to the prior quarter. The first quarter included a one-time charge of $979,000 in compensation and benefits.

Year to date net income is below last year due to the significant investment in a growth strategy. Full time equivalent employees at June 30, 2018 were 184, an increase of 42 employees or 30% higher than a year ago.

As announced in May, the Bank expanded into North Orange County with a new loan production office. "North Orange County has always been an important market for American Business Bank, and we look forward to further penetrating this business rich environment. We hired an impressive team of bankers for this office and are confident that they will meet the needs of businesses in the area," said David Wolf, Executive Vice President.

AMERICAN BUSINESS BANK headquartered in downtown Los Angeles offers a wide range of financial services to the business marketplace. Clients include wholesalers, manufacturers, service businesses, professionals and non-profits. The Bank has opened five Loan Production Offices in strategic areas including our North Orange County Office in Anaheim, our Orange County Office in Irvine, our South Bay Office in Torrance, our San Fernando Valley Office in the Warner Center, and our Inland Empire Office in Ontario.

American Business Bank
Figures in $000, except per share amounts

BALANCE SHEET (unaudited)



	June			March			December			June
	2018			2018			2017			2017
Assets:
Cash and Due from Banks	$	54,916		$	44,171		$	32,205		$	47,915
Interest Earning Deposits with Other Financial Institutions		41,709			2,705			9,701			12,706

Investment Securities:
US Agencies		504,722			551,783			584,950			517,498
Mortgage Backed Securities		86,795			88,362			86,909			73,187
State & Municipals		166,504			177,305			169,803			183,213
US Treasuries		9,791			9,822			9,931			-
Corporate Bonds		1,995			1,994			3,394			6,488
Securities Available-for-Sale, at Fair Value		769,807			829,266			854,987			780,386
Federal Home Loan Bank Stock, at Cost		10,611			10,193			10,190			10,190
Total Investment Securities		780,418			839,459			865,177			790,576
Gross Loans:
Commercial Real Estate		733,183			671,478			641,459			597,035
Commercial & Industrial		295,127			256,068			216,007			225,827
Residential Real Estate		61,807			68,956			59,665			58,457
Installment and Other		3,418			3,042			3,262			3,455
Total Gross Loans		1,093,535			999,544			920,393			884,774
Allowance for Loan & Lease Losses		(15,431	)		(14,487	)		(13,639	)		(13,324	)
Net Loans		1,078,104			985,057			906,754			871,450
Premises & Equipment		1,816			1,551			1,273			1,464
Other Assets		64,289			59,995			58,439			53,511
Total Assets	$	2,021,252		$	1,932,938		$	1,873,549		$	1,777,622

Liabilities:
Non-Interest Bearing Demand Deposits	$	905,552		$	876,164		$	863,410		$	829,775
Interest Bearing Transaction Accounts		203,068			179,876			170,326			185,063
Money Market and Savings Deposits		632,257			613,881			563,611			536,790
Certificates of Deposit		67,032			57,544			42,390			42,690
Total Deposits		1,807,909			1,727,465			1,639,737			1,594,318
Federal Home Loan Bank Advances / Other Borrowings		37,000			32,000			62,000			18,000
Other Liabilities		21,686			20,336			19,009			13,059
Total Liabilities	$	1,866,595		$	1,779,801		$	1,720,746		$	1,625,377

Shareholders' Equity:
Common Stock & Retained Earnings	$	170,673		$	165,750		$	160,880		$	157,691
Accumulated Other Comprehensive Income / (Loss)		(16,016	)		(12,613	)		(8,077	)		(5,446	)
Total Shareholders' Equity	$	154,657		$	153,137		$	152,803		$	152,245
Total Liabilities & Shareholders' Equity	$	2,021,252		$	1,932,938		$	1,873,549		$	1,777,622

Standby Letters of Credit	$	30,449		$	29,220		$	28,863		$	28,777

Capital Adequacy:
Tangible Common Equity / Tangible Assets		7.65	%		7.92	%		8.16	%		8.56	%
Common Equity Tier 1 Ratio		14.12	%		14.84	%		15.26	%		14.80	%
Tier 1 Capital Ratio		14.12	%		14.84	%		15.26	%		14.80	%
Total Capital Ratio		15.37	%		16.09	%		16.51	%		16.05	%
Tier 1 Leverage Ratio		8.66	%		8.55	%		8.55	%		8.02	%

Per Share Information:
Common Shares Outstanding		7,662,837			7,588,400			7,539,922			7,515,680
Book Value Per Share	$	20.18		$	20.18		$	20.27		$	20.23
Tangible Book Value Per Share	$	20.18		$	20.18		$	20.27		$	20.23


American Business Bank
Figures in $000, except per share amounts

INCOME STATEMENT (unaudited)


	For the three months ended:
	June			March			June
	2018			2018			2017
Interest Income:
Loans	$	11,846		$	10,612		$	9,236
Investment Securities		4,652			4,983			4,458
Interest Earning Deposits in Other Financial Institutions		93			45			125
Total Interest Income		16,591			15,640			13,819


Interest Expense:
Money Market and Savings Deposits		531			407			268
Certificates of Deposits		77			62			35
Federal Home Loan Bank Advances and Other		141			175			96
Total Interest Expense		749			644			399


Net Interest Income		15,842			14,996			13,420
Provision for Loan Losses		(931	)		(832	)		(150	)
Net Interest Income after Provision for Loan Losses		14,911			14,164			13,270


Non-Interest Income:
Deposit Fees		474			424			415
International Fees		220			194			186
Realized Securities Gains (Losses)		(149	)		(195	)		(87	)
Gains (Losses) on Sale of SBA Loans		491			105			-
Other		466			407			400
Total Non-Interest Income		1,502			935			914


Non-Interest Expense:
Compensation & Benefits		7,962			8,793			6,002
Occupancy & Equipment		853			734			702
Professional Services		1,207			1,139			972
Promotion Expenses		321			271			393
Other		1,234			1,177			1,335
Total Non-Interest Expense		11,577			12,114			9,404


Earnings before income taxes		4,836			2,985			4,780
Provision for Income Tax		(1,106	)		(559	)		(1,266	)


NET INCOME	$	3,730		$	2,426		$	3,514

After-Tax Realized Securities (Gains) / Losses	$	115		$	159		$	64
After-Tax Cash Value - DCP ABB stocks (Gains) / Losses	$	50		$	81		$	1,026
Core Net Income	$	3,895		$	2,666		$	4,604

Per Share Information:
Earnings Per Share - Basic	$	0.49		$	0.32		$	0.47

Earnings Per Share - Diluted	$	0.48		$	0.31		$	0.45

Core Earnings Per Share - Diluted	$	0.50		$	0.34		$	0.59

Weighted Average Shares - Basic		7,616,766			7,569,277			7,515,680

Weighted Average Shares - Diluted		7,847,871			7,830,162			7,756,363


American Business Bank
Figures in $000, except per share amounts

INCOME STATEMENT (unaudited)


	For the six months ended:
	June			June
	2018			2017
Interest Income:
Loans	$	22,458		$	17,628
Investment Securities		9,635			10,101
Interest Earning Deposits in Other Financial Institutions		138			161
Total Interest Income		32,231			27,890


Interest Expense:
Money Market and Savings Deposits		940			540
Certificates of Deposits		138			70
Federal Home Loan Bank Advances and Other		315			304
Total Interest Expense		1,393			914


Net Interest Income		30,838			26,976
Provision for Loan Losses		(1,763	)		(328	)
Net Interest Income after Provision for Loan Losses		29,075			26,648


Non-Interest Income:
Deposit Fees		898			819
International Fees		414			374
Realized Securities Gains (Losses)		(345	)		(47	)
Gains (Losses) on Sale of SBA Loans		596			-
Other		873			814
Total Non-Interest Income		2,436			1,960


Non-Interest Expense:
Compensation & Benefits		16,755			12,863
Occupancy & Equipment		1,586			1,314
Professional Services		2,346			1,736
Promotion Expenses		592			648
Other		2,410			2,694
Total Non-Interest Expense		23,689			19,255


Earnings before income taxes		7,822			9,353
Provision for Income Tax		(1,665	)		(2,283	)


NET INCOME	$	6,157		$	7,070

After-Tax Realized Securities (Gains) / Losses	$	271		$	36
After-Tax Cash Value - DCP ABB stocks (Gains) / Losses	$	51		$	1,055
Tax Reform Act Deferred Tax Asset Writeoff	$	-		$	-
Core Net Income	$	6,479		$	8,161

Per Share Information:
Earnings Per Share - Basic	$	0.81		$	0.94

Earnings Per Share - Diluted	$	0.79		$	0.91

Core Earnings Per Share - Diluted	$	0.83		$	1.05

Weighted Average Shares - Basic		7,593,022			7,515,680

Weighted Average Shares - Diluted		7,838,821			7,756,363


American Business Bank
Figures in $000, except per share amounts



	June			June
	2018			2017

Performance Ratios:
Return on Average Assets (ROAA)		0.63	%		0.77	%
Return on Average Equity (ROAE)		8.09	%		9.97	%

Core Return on Average Assets (ROAA)		0.67	%		0.89	%
Core Return on Average Equity (ROAE)		8.52	%		11.51	%


Asset Quality Overview:
Non-Performing Loans	$	2,115		$	933
Loans 90+Days Past Due and Still Accruing		-			-
Total Non-Performing Loans	$	2,115		$	933

Restructured Loans (TDRs)	$	239		$	247

Other Real Estate Owned		-			-

ALLL / Gross Loans		1.41	%		1.51	%
Non-Performing Loans / Total Loans *		0.19	%		0.11	%
Non-Performing Assets / Total Assets *		0.10	%		0.05	%
Net Charge-Offs (Recoveries)	$	(30	)	$	(31	)
Net Charge-Offs (Recoveries) / Average Gross Loans		(0.00	%)		(0.00	%)

* Excludes Restructured Loans


American Business Bank
Figures in $000

QUARTERLY AVERAGE BALANCE SHEETS AND YIELD ANALYSIS (unaudited)


	For the three months ended:
	June 2018					March 2018
	Average		Interest		Average	Average		Interest		Average
	Balance		Inc/Exp		Yield/Rate	Balance		Inc/Exp		Yield/Rate
Interest Earning Assets:
Interest Earning Deposits with Other Financial Institutions	$	21,686	$	93	1.74%	$	11,658	$	45	1.55%

Investment Securities:
US Agencies		528,777		2,180	1.65%		580,066		2,580	1.78%
Mortgage Backed Securities		92,146		627	2.72%		91,726		587	2.56%
State & Municipals		187,246		1,621	3.46%		181,741		1,580	3.48%
US Treasuries		10,073		37	1.49%		10,079		37	1.48%
Corporate Bonds		2,000		16	3.12%		2,353		16	2.76%
Securities Available-for-Sale		820,242		4,481	2.16%		865,965		4,801	2.22%
Federal Home Loan Bank Stock		10,524		171	6.50%		10,192		183	7.16%
Total Investment Securities		830,766		4,652	2.22%		876,157		4,983	2.27%
Gross Loans:
Commercial Real Estate		698,804		7,801	4.48%		659,296		7,193	4.42%
Commercial & Industrial		275,934		3,156	4.59%		238,393		2,592	4.41%
Residential Real Estate		66,101		811	4.92%		64,624		757	4.75%
Installment and Other		3,719		78	8.36%		3,389		70	8.39%
Total Gross Loans		1,044,558		11,846	4.55%		965,702		10,612	4.46%
Total Interest Earning Assets	$	1,897,010	$	16,591	3.46%	$	1,853,517	$	15,640	3.38%

Liabilities:
Non-Interest Bearing Demand Deposits		895,336		-	0.00%		881,512		-	0.00%
Interest Bearing Transaction Accounts		180,292		76	0.17%		173,091		74	0.17%
Money Market and Savings Deposits		629,622		455	0.29%		593,198		333	0.23%
Certificates of Deposit		62,415		77	0.49%		56,548		62	0.44%
Total Deposits		1,767,664		608	0.14%		1,704,350		469	0.11%
Federal Home Loan Bank Advances / Other Borrowings		30,648		141	1.84%		46,850		175	1.51%
Total Interest Deposits & Borrowings		902,977		749	0.33%		869,688		644	0.30%
Total Deposits & Borrowings	$	1,798,312	$	749	0.17%	$	1,751,200	$	644	0.15%

Net Interest Income			$	15,842				$	14,996
Net Interest Rate Spread					3.29%					3.23%
Net Interest Margin					3.35%					3.28%


American Business Bank
Figures in $000

QUARTERLY AVERAGE BALANCE SHEETS AND YIELD ANALYSIS (unaudited)


	For the three months ended:
	June 2018					June 2017
	Average		Interest		Average	Average		Interest		Average
	Balance		Inc/Exp		Yield/Rate	Balance		Inc/Exp		Yield/Rate
Interest Earning Assets:
Interest Earning Deposits with Other Financial Institutions	$	21,686	$	93	1.74%	$	28,432	$	125	1.78%

Investment Securities:
US Agencies		528,777		2,180	1.65%		524,796		1,876	1.43%
Mortgage Backed Securities		92,146		627	2.72%		76,923		326	1.70%
State & Municipals		187,246		1,621	3.46%		224,179		2,097	3.74%
US Treasuries		10,073		37	1.49%		-		-	0.00%
Corporate Bonds		2,000		16	3.12%		6,501		45	2.79%
Securities Available-for-Sale		820,242		4,481	2.16%		832,400		4,344	2.06%
Federal Home Loan Bank Stock		10,524		171	6.50%		10,002		114	4.56%
Total Investment Securities		830,766		4,652	2.22%		842,402		4,458	2.09%
Gross Loans:
Commercial Real Estate		698,804		7,801	4.48%		581,539		6,309	4.35%
Commercial & Industrial		275,934		3,156	4.59%		216,100		2,270	4.21%
Residential Real Estate		66,101		811	4.92%		54,343		622	4.59%
Installment and Other		3,719		78	8.36%		3,882		35	3.56%
Total Gross Loans		1,044,558		11,846	4.55%		855,864		9,236	4.33%
Total Interest Earning Assets	$	1,897,010	$	16,591	3.46%	$	1,726,698	$	13,819	3.17%

Liabilities:
Non-Interest Bearing Demand Deposits		895,336		-	0.00%		860,856		-	0.00%
Interest Bearing Transaction Accounts		180,292		76	0.17%		169,522		64	0.15%
Money Market and Savings Deposits		629,622		455	0.29%		537,711		204	0.15%
Certificates of Deposit		62,415		77	0.49%		39,390		35	0.35%
Total Deposits		1,767,664		608	0.14%		1,607,479		303	0.08%
Federal Home Loan Bank Advances / Other Borrowings		30,648		141	1.84%		42,467		96	0.91%
Total Interest Deposits & Borrowings		902,977		749	0.33%		789,090		399	0.20%
Total Deposits & Borrowings	$	1,798,312	$	749	0.17%	$	1,649,946	$	399	0.10%

Net Interest Income			$	15,842				$	13,420
Net Interest Rate Spread					3.29%					3.07%
Net Interest Margin					3.35%					3.12%


American Business Bank
Figures in $000

YEAR-TO-DATE AVERAGE BALANCE SHEETS AND YIELD ANALYSIS (unaudited)


	For the six months ended:
	June 2018					June 2017
	Average		Interest		Average	Average		Interest		Average
	Balance		Inc/Exp		Yield/Rate	Balance		Inc/Exp		Yield/Rate
Interest Earning Assets:
Interest Earning Deposits with Other Financial Institutions	$	16,700	$	138	1.67%	$	15,011	$	161	2.17%

Investment Securities:
US Agencies		554,279		4,761	1.72%		565,595		4,253	1.50%
Mortgage Backed Securities		91,937		1,214	2.64%		77,789		750	1.93%
State & Municipals		184,509		3,201	3.47%		248,836		4,683	3.76%
US Treasuries		10,076		74	1.48%		-		-	0.00%
Corporate Bonds		2,176		32	2.93%		6,501		89	2.75%
Securities Available-for-Sale		842,977		9,282	2.19%		898,721		9,775	2.16%
Federal Home Loan Bank Stock		10,359		353	6.82%		9,725		327	6.71%
Total Investment Securities		853,336		9,635	2.25%		908,447		10,101	2.21%
Gross Loans:
Commercial Real Estate		679,159		14,994	4.45%		571,834		12,236	4.32%
Commercial & Industrial		257,267		5,748	4.51%		207,677		4,254	4.13%
Residential Real Estate		65,367		1,568	4.84%		48,106		1,063	4.45%
Installment and Other		3,555		148	8.37%		3,927		75	3.86%
Total Gross Loans		1,005,348		22,458	4.50%		831,544		17,628	4.27%
Total Interest Earning Assets	$	1,875,384	$	32,231	3.42%	$	1,755,002	$	27,890	3.16%

Liabilities:
Non-Interest Bearing Demand Deposits		888,462		-	0.00%		844,899		-	0.00%
Interest Bearing Transaction Accounts		176,711		151	0.17%		170,529		124	0.15%
Money Market and Savings Deposits		611,511		789	0.26%		547,970		416	0.15%
Certificates of Deposit		59,498		138	0.47%		40,048		70	0.35%
Total Deposits		1,736,182		1,078	0.13%		1,603,446		610	0.08%
Federal Home Loan Bank Advances / Other Borrowings		38,704		315	1.64%		80,343		304	0.76%
Total Interest Deposits & Borrowings		886,424		1,393	0.32%		838,890		914	0.22%
Total Deposits & Borrowings	$	1,774,886	$	1,393	0.16%	$	1,683,788	$	914	0.11%

Net Interest Income			$	30,838				$	26,976
Net Interest Rate Spread					3.26%					3.05%
Net Interest Margin					3.32%					3.10%

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