Market Overview

American Business Bank Announces Record Loan Growth of $119 Million up 15% for 2017

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Bank invests in its future with strategic hires in the fourth quarter

AMERICAN BUSINESS BANK (OTC:AMBZ) today reported net income of
$8,319,000 for the year ended December 31, 2017, or $1.07 per diluted
share compared to net income of $12,833,000, or $1.68 per diluted share
for the year ended December 31, 2016. The results for 2017 include a
$5.1 million ($0.66 per diluted share) write-down of the net deferred
tax asset due to the Tax Cuts and Job Acts of 2017 (Tax Reform Act)
enacted in December. Without the write-down of the net deferred tax
asset and gains/losses on securities and stock, diluted core earnings
per share would have been $1.82 in 2017 compared to $1.52 in 2016.

Total assets increased $29 million, or 2%, from $1.84 billion in 2016 to
$1.87 billion in 2017. Total loans increased $119 million, or 15%, to
$920 million in 2017 compared to $801 million in 2016. Deposits
increased $40 million, or 3%, to $1.64 billion in 2017 compared to $1.60
billion in 2016. This resulted in an increase in the loan to deposit
ratio from 49% to 55% during the year. At December 31, 2017 non-interest
bearing deposits represented 53% of total deposits. Borrowings from the
Federal Home Loan Bank decreased from $103 million in 2016 to $62
million in 2017.

Asset quality at the end of the fourth quarter remains excellent with
non-performing assets to total assets of 0.05%, $915,000 in
non-performing loans, and no Other Real Estate Owned (OREO). At year
end, the allowance for loan losses stood at $13.6 million, or 1.48% of
total loans. For 2017, the Bank had a net recovery of ($46,000).

Net Interest Income increased $5,363,000, or 11% to $55,223,000 in 2017
compared to $49,860,000 in 2016 primarily due to the organic loan growth
the Bank achieved in 2017. For the fourth quarter of 2017, the cost of
deposits was 0.09%.

Non-Interest Income decreased from $4,366,000 in 2016 to $924,000 in
2017. During the year, the Bank realized securities losses of ($365,000)
compared to realized securities gains of $2.4 million in 2016. The
reduction of the securities portfolio during the year was related to
restructuring and repositioning in response to the Tax Reform Act.

Non-Interest Expense increased $851,000, or 2%, to $37.4 million in 2017
from $36.5 million in 2016. This increase was in salaries and employee
benefits as the full time equivalent employee count rose from 138 to 169
during the year. This increase mainly took place in the fourth quarter
with the hiring of additional relationship managers to better penetrate
our at large regional markets and create a dedicated SBA department, as
well as backoffice personnel to support this growth. Additionally,
effective October 31, 2017, Karen Schoenbaum joined the Bank as
Executive Vice President and Chief Financial Officer.

"With Karen joining the Bank we have strengthened our leadership team to
reflect our increasing size and sophistication," said Leon Blankstein,
ABB's President, CEO and Director. "Her past experiences will assist us
as we build on the results of the first twenty years of American
Business Bank while being one of the few remaining independent banks
serving small to medium sized business clients in the Southern
California market."

"In this same quarter we have been thrilled to gain seasoned
relationship bankers familiar with our business model and an SBA group
that will offer new and existing customers a robust menu of SBA
offerings."

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 four Loan Production Offices in
strategic areas including 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
 
CONSOLIDATED BALANCE SHEET (unaudited)
 
 
As of:        
December December Change
  2017         2016   %  

Assets:

Cash and non-interest earning deposits $ 32,424 $ 37,560 -13.7 %
Interest earning deposits at other financial institutions 9,483 697 1260.5 %
 

Investment Securities:

US Agencies 584,950 608,695 -3.9 %
Mortgage Backed Securities 86,908 77,420 12.3 %
State & Municipals 169,803 260,842 -34.9 %
    Other         13,326         6,466   106.1 %
Total Investment Securities 854,987 953,423 -10.3 %

Gross Loans:

Commercial Real Estate 609,411 519,902 17.2 %
Commercial & Industrial 207,293 204,634 1.3 %
Other Real Estate 91,699 72,035 27.3 %
    Other         11,990         4,769   151.4 %
Total Gross Loans 920,393 801,340 14.9 %
        Allowance for Loan & Lease Losses   (13,639 )       (12,965 ) 5.2 %
Net Loans 906,754 788,375 15.0 %
Premises & Equipment 1,273 1,442 -11.7 %
  Other Assets         68,628         62,886   9.1 %
    Total Assets       $ 1,873,549       $ 1,844,383   1.6 %
 

Liabilities:

Demand Deposits $ 863,409 $ 831,838 3.8 %
Money Market 728,402 721,720 0.9 %
  Time Deposits and Savings     47,925         45,718   4.8 %
Total Deposits 1,639,736 1,599,276 2.5 %
FHLB Advances / Other Borrowings 62,000 103,000 -39.8 %
  Other Liabilities         19,010         6,470   193.8 %
    Total Liabilities     $ 1,720,746       $ 1,708,746   0.7 %
 

Shareholders' Equity:

Common Stock & Retained Earnings $ 160,880 $ 148,532 8.3 %
  Accumulated Other Comprehensive Income / (Loss)   (8,077 )       (12,895 ) -37.4 %
    Total Shareholders' Equity   $ 152,803       $ 135,637   12.7 %
    Total Liabilities & Shareholders' Equity $ 1,873,549       $ 1,844,383   1.6 %
 

Capital Adequacy:

Tangible Common Equity / Tangible Assets 8.16 % 7.35 % --
Common Equity Tier 1 Ratio 15.26 % 15.09 % --
Tier 1 Capital Ratio 15.26 % 15.09 % --
Total Capital Ratio 16.51 % 16.35 % --
Tier 1 Leverage Ratio 8.55 % 7.54 %
 

Per Share Information:

Common Shares Outstanding 7,539,922 7,441,655 --
Book Value Per Share $ 20.27 $ 18.23 11.19 %
Tangible Book Value Per Share $ 20.27 $ 18.23 11.19 %
             
American Business Bank

Figures in $000, except per share amounts

 
CONSOLIDATED INCOME STATEMENT (unaudited)
 
 

For the 12-month period ended:

December December Change
  2017         2016   %  

Interest Income:

Loans $ 37,559 $ 31,564 19.0 %
  Investment Securities       19,377         19,786   -2.1 %
Total Interest Income 56,936 51,350 10.9 %
 
 

Interest Expense:

Money Market, Interest Checking & Savings 1,232 1,154 6.8 %
Time Deposits 152 180 -15.7 %
  Repurchase Agreements / Other Borrowings   329         156   110.8 %
Total Interest Expense 1,713 1,490 15.0 %
 
 
Net Interest Income 55,223 49,860 10.8 %
  Provision for Loan Losses     (600 )       (100 ) 500.0 %
Net Interest Income After Provision for Loan Losses 54,623 49,760 9.8 %
 
 

Non-Interest Income:

Deposit Fees 1,793 1,598 12.2 %
Realized Securities Gains (Losses) (365 ) 2,379 -115.3 %
  Other           (504 )       389   -229.5 %
Total Non-Interest Income 924 4,366 -78.8 %
 
 

Non-Interest Expense:

Compensation & Benefits 23,919 19,116 25.1 %
Occupancy & Equipment 2,669 2,525 5.7 %
  Other             10,764         14,860   -27.6 %
Total Non-Interest Expense 37,352 36,501 2.3 %
 
 
Earnings before income taxes 18,195 17,625 3.2 %
  Provision for Income Tax     (9,876 )       (4,792 ) 106.1 %
 
 
NET INCOME       $ 8,319       $ 12,833   -35.2 %
 
After-Tax Realized Securities (Gains) / Losses $ 167 $ (1,732 )
After-Tax Cash Value - DCP ABB stocks (Gains) / Losses $ 575 $ 490
Tax Reform Act Deferred Tax Asset Writeoff $ 5,139 $ -
Core Net Income       $ 14,200  

 

  $ 11,591     22.5 %
 

Per Share Information:

Earnings Per Share - Basic $ 1.11 $ 1.73 -36.0 %
 
Earnings Per Share - Diluted $ 1.07 $ 1.68 -36.7 %
 
Core Earnings Per Share - Diluted $ 1.82 $ 1.52 19.7 %
 
Weighted Average Shares - Basic 7,508,168 7,407,287 --
 
Weighted Average Shares - Diluted 7,799,975 7,621,352 --
             
American Business Bank

Figures in $000, except per share amounts

 

December December Change
2017     2016 %
 

Performance Ratios

Return on Average Assets (ROAA) 0.45 % 0.73 % --
Return on Average Equity (ROAE) 5.60 % 9.17 % --
 
Core Return on Average Assets (ROAA) 0.77 % 0.66 % --
Core Return on Average Equity (ROAE) 9.56 % 8.28 % --
 
 

Asset Quality Overview

Non-Performing Loans $ 915 $ 2,104 NA
  Loans 90+Days past due and still accruing   -         -     NA
Total Non-Performing Loans $ 915 $ 2,104 NA
 
Restructured Loans (TDR's) $ 243 $ 249 -2.3 %
 
Other Real Estate Owned 0 0 --
 
ALLL / Gross Loans 1.48 % 1.62 % --
Non-Performing Loans / Total Loans * 0.10 % 0.26 % --
Non-Performing Assets / Total Assets * 0.05 % 0.11 % --
Net Charge-Offs (Recoveries) $ (46 ) $ (107 ) --
Net Charge-Offs (Recoveries) / Average Gross Loans (0.01 %) (0.01 %) --
 
* Excludes Restructured Loans

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