Market Overview

American Business Bank Announces Record Outstanding Loans of $1 Billion

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Loans and Deposits increase at double digit annualized growth rates

AMERICAN BUSINESS BANK (OTC:AMBZ) today reported net income of $2.4
million for the quarter ended March 31, 2018, or $.31 per diluted share
compared to net income of $3.6 million or $.46 per diluted share for the
quarter ended March 31, 2017. The results for 2018 reflect an additional
provision for loan losses of $654,000 over first quarter 2017 related to
strong loan growth during the first quarter of 2018. Furthermore, the
increase in salaries and benefits of $3 million over last year is
primarily due to the hiring of additional relationship managers,
production support personnel and an SBA group.

For the quarter, total assets increased $59 million, or 13% annualized
from year end December 31, 2017 to $1.9 billion. This was driven by an
increase in deposits of $88 million, or 22% annualized growth from year
end. Total loans increased $79 million to $1 billion, or 35% annualized
growth from year end. This resulted in an increase in the loan to
deposit ratio to 58% from 56% during the quarter. At March 31, 2018,
non-interest bearing deposits represented 51% of total deposits. "This
quarterly growth surpassed our expectations and reflects our commitment
to and reception from small and medium size business customers who crave
the value added service we provide," said Leon Blankstein, ABB's
President, CEO and Director.

From a year ago, total assets increased $114 million or 6%, from March
31, 2017. This was driven by an increase in deposits of $177 million, or
11% over the twelve months. Total loans increased $165 million, or 20%
from a year ago. This resulted in an increase in the loan to deposit
ratio to 58% from 54% a year ago.

During the first quarter of 2018, the Bank sold all of its treasury
stock that it had at year end 2017; this generated an increase in
capital of $1.6 million.

Asset quality at the end of the first quarter remains excellent with
non-performing assets to total assets of 0.06%, $1.2 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 $14.5 million, or
1.45% of total loans. For 2018 year to date, the Bank had a recovery of
($16,000).

Net Interest Income increased $1.4 million, or 11% in the first quarter
of 2018 compared to the first quarter of 2017 primarily due to the
organic loan growth the Bank achieved in that period coupled with an
increase in the loan yield to 4.48% for 2018 year to date.

Non-Interest Income decreased in 2018 year over year. During the first
quarter of 2018, the Bank realized securities losses of ($195,000)
compared to realized securities gains of $40,000 in the first quarter of
2017. The reduction of the securities portfolio during the period was
related to continued restructuring and repositioning in response to the
Tax Reform Act and heightened loan demand. However, during the quarter
the Bank recorded a gain on sale of SBA loans of $105,000 generated by
the new SBA group.

Non-Interest Expense increased for the quarter ending March 31, 2018
compared to the prior year with the hiring of new personnel in the
fourth quarter of 2017. "This investment we believe will yield greater
profitability in the future as the new hires combined with the existing
relationship management team continue to grow good credit quality loans
and low cost core deposits," said Karen Schoenbaum, Executive Vice
President and Chief Financial Officer.

Additionally, one of the Bank's founders and its former Chief Credit
Officer, Robin Paterson took early retirement effective March 15, 2018
after 20 years of contributions to the Bank. "He was not only my
partner, but also an outstanding banker," said Leon Blankstein, ABB's
President, CEO and Director. "We are fortunate that another original
employee of the Bank who Robin mentored, Patti Vollmer, has been
promoted to Executive Vice President and Chief Credit Officer from
Deputy Chief Credit Officer. Patti has been trained by the best and will
continue our strong credit culture." The early retirement increased
salaries and benefits by $979,000 in the quarter.

"In this same quarter we have been thrilled to announce receipt of the
Preferred Lenders Program ("PLP") participant status with the U.S. Small
Business Administration ("SBA")," said Stephen Pihl, Regional EVP and
SBA Department Manager. "This is the highest bank designation granted by
the SBA and is reserved only for top tier bank lenders."

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
 
CONSOLIDATED BALANCE SHEET (unaudited)
 
 
  As of:        
March   December   March
2018   2017   2017

Assets:

Cash and Due from Banks $ 44,171 $ 32,205 $ 57,853
Interest Earning Deposits with Other Financial Institutions 2,705 9,701 921
 

Investment Securities:

US Agencies 551,783 584,950 550,381
Mortgage Backed Securities 88,362 86,909 74,050
State & Municipals 177,305 169,803 244,130
Other     11,816       13,325       6,478  
Securities Available-for-Sale, at Fair Value 829,266 854,987 875,039
Federal Home Loan Bank Stock, at Cost     10,193       10,190       9,447  
Total Investment Securities 839,459 865,177 884,486

Gross Loans:

Commercial Real Estate 671,478 641,459 577,778
Commercial & Industrial 256,068 216,007 207,381
Residential Real Estate 68,956 59,665 45,919
Installment and Other     3,042       3,262       3,509  
Total Gross Loans 999,544 920,393 834,587
Allowance for Loan & Lease Losses     (14,487 )     (13,639 )     (13,166 )
Net Loans 985,057 906,754 821,421
Premises & Equipment 1,551 1,273 1,366
Other Assets     59,995       58,439       52,923  
Total Assets   $ 1,932,938     $ 1,873,549     $ 1,818,970  
 

Liabilities:

Non-Interest Bearing Demand Deposits $ 876,164 $ 863,410 $ 795,132
Interest Bearing Transaction Accounts 179,876 170,326 178,862
Money Market and Savings Deposits 613,881 563,611 537,464
Certificates of Deposit     57,544       42,390       39,455  
Total Deposits 1,727,465 1,639,737 1,550,913
Federal Home Loan Bank Advances / Other Borrowings 32,000 62,000 118,000
Other Liabilities     20,336       19,009       9,305  
Total Liabilities   $ 1,779,801     $ 1,720,746     $ 1,678,218  
 

Shareholders' Equity:

Common Stock & Retained Earnings $ 165,750 $ 160,880 $ 153,315
Accumulated Other Comprehensive Income / (Loss)     (12,613 )     (8,077 )     (12,563 )
Total Shareholders' Equity   $ 153,137     $ 152,803     $ 140,752  
Total Liabilities & Shareholders' Equity   $ 1,932,938     $ 1,873,549     $ 1,818,970  
 

Capital Adequacy:

Tangible Common Equity / Tangible Assets 7.92 % 8.16 % 7.74 %
Common Equity Tier 1 Ratio 14.84 % 15.26 % 14.96 %
Tier 1 Capital Ratio 14.84 % 15.26 % 14.96 %
Total Capital Ratio 16.09 % 16.51 % 16.21 %
Tier 1 Leverage Ratio 8.55 % 8.55 % 7.51 %
 

Per Share Information:

Common Shares Outstanding 7,588,400 7,539,922 7,465,725
Book Value Per Share $ 20.18 $ 20.27 $ 18.84
Tangible Book Value Per Share $ 20.18 $ 20.27 $ 18.84
 
 
American Business Bank
Figures in $000, except per share amounts
 
CONSOLIDATED INCOME STATEMENT (unaudited)
 
 
  For the period ended:
March   March
2018   2017

Interest Income:

Loans $ 10,612 $ 8,392
Investment Securities 4,983 5,643
Interest Bearing Deposits in Other Financial Institutions     45       36  
Total Interest Income 15,640 14,071
 
 

Interest Expense:

Money Market and Savings Deposits 407 271
Time Deposits 62 36
Federal Home Loan Bank Advances and Other     175       208  
Total Interest Expense 644 515
 
 
Net Interest Income 14,996 13,557
Provision for Loan Losses     (832 )     (178 )
Net Interest Income after Provision for Loan Losses 14,164 13,379
 
 

Non-Interest Income:

Deposit Fees 424 416
Realized Securities Gains (Losses) (195 ) 40
Gains (Losses) on Sale of SBA Loans 105 -
Other     601       589  
Total Non-Interest Income 935 1,045
 
 

Non-Interest Expense:

Compensation & Benefits 8,793 6,862
Occupancy & Equipment 734 611
Other     2,587       2,377  
Total Non-Interest Expense 12,114 9,850
 
 
Earnings before income taxes 2,985 4,574
Provision for Income Tax     (559 )     (1,017 )
 
 
NET INCOME   $ 2,426     $ 3,557  
 
After-Tax Realized Securities (Gains) / Losses $ 159 $ (31 )
After-Tax Cash Value - DCP ABB stocks (Gains) / Losses $ 81 $ 883
Core Net Income   $ 2,666     $ 4,409  
 

Per Share Information:

Earnings Per Share - Basic $ 0.32 $ 0.48
 
Earnings Per Share - Diluted $ 0.31 $ 0.46
 
Core Earnings Per Share - Diluted $ 0.34 $ 0.57
 
Weighted Average Shares - Basic 7,569,277 7,457,949
 
Weighted Average Shares - Diluted 7,830,162 7,709,102
 
 
American Business Bank
Figures in $000, except per share amounts
 
 
       
March   March
2018   2017
 

Performance Ratios

Return on Average Assets (ROAA) 0.50 % 0.76 %
Return on Average Equity (ROAE) 6.37 % 10.31 %
 
Core Return on Average Assets (ROAA) 0.52 % 0.81 %
Core Return on Average Equity (ROAE) 6.53 % 10.93 %
 
 

Asset Quality Overview

Non-Performing Loans $ 915 $ 2,104
Loans 90+Days Past Due and Still Accruing     -       -  
Total Non-Performing Loans $ 915 $ 2,104
 
Restructured Loans (TDR's) $ 241 $ 914
 
Other Real Estate Owned 0 0
 
ALLL / Gross Loans 1.45 % 1.58 %
Non-Performing Loans / Total Loans * 0.09 % 0.25 %
Non-Performing Assets / Total Assets * 0.05 % 0.12 %
Net Charge-Offs (Recoveries) $ (16 ) $ (22 )
Net Charge-Offs (Recoveries) / Average Gross Loans (0.00 %) (0.00 %)
 
*Excludes Restructured Loans

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