Business Wire | Oct 29, 2020 09:05AM EDT

Record Net Income From Robust SBA PPP Program

Oct. 29, 2020

LOS ANGELES--(BUSINESS WIRE)--Oct. 29, 2020--AMERICAN BUSINESS BANK (OTCQX: AMBZ) today reported net income of $7.9 million or $0.97 per fully diluted share for the third quarter of 2020 compared to $5.4 million or $0.67 per fully diluted share for the third quarter of 2019 primarily due to increased net interest income as a result of PPP loans outstanding during the quarter.

"While the pandemic creates near-term uncertainty, we are more confident for the future based upon the general return to profitability of our outstanding customer base during the quarter. Our business development efforts have also been successful as prospects heard of our significant participation in the PPP program resulting in loan and deposit growth this quarter and a solid pipeline of new relationships. While we are watching credit quality closely, the vast majority of our portfolio is well managed by our competent business owners who are taking the necessary steps as needed to generate positive returns in this challenging time. Thus, we anticipate continued strong credit metrics reflective of our prudent approach in the evaluation of clients and prospects.

"We remain committed to supporting the needs of our business community, as well as providing for the safety of our employees who continue to provide the same excellent responsiveness to customers despite the changed environment. Additionally, we are assisting our clients with a highly regarded accounting firm to ensure they meet the SBA requirements to maximize PPP loan forgiveness. As PPP loans payoff, the Bank stands to earn a noteworthy amount of fees to offset the effects of the unprecedented low interest rate environment," said Leon Blankstein, ABB's President, CEO and Director.

For the quarter ending September 30, 2020, net income was $7.9 million or $0.97 per fully diluted share, compared to net income of $6.7 million or $0.83 per fully diluted share for the second quarter of 2020. Net interest income for the third quarter was $23.4 million, a 7% increase over the second quarter of 2020 as interest and net deferred fee amortization on PPP loans increased by $843,000. This was partially offset by lower rates on non-PPP loans. For the quarter ending September 30, 2020, the cost of deposits was 0.07%, representing a 0.01% decline from the second quarter of 2020. Additionally, interest income on the securities portfolio increased by $1 million in the third quarter of 2020 compared to the second quarter of 2020 as excess liquidity was deployed into investment securities during the quarter. For the quarter ending September 30, 2020, the provision for loan losses was $450,000. The allowance for loan losses as a percentage of loans, excluding PPP loans, was 1.54% at September 30, 2020 and June 30, 2020.

Net income was $19.4 million or $2.40 per fully diluted share for the nine months ended September 30, 2020, compared to $16.1 million or $1.99 per fully diluted share for the nine months ended September 30, 2019. The increase was primarily due to loan growth of 52% between periods, partially offset by a lower interest earning asset yield resulting in increased net interest income.

Net Interest Margin

Net interest margin for the third quarter of 2020 was 2.89% compared to 2.88% for the second quarter of 2020 and 3.66% for the third quarter of 2019. Excluding the impact of PPP loans, the net interest margin was 3.06% for the third quarter of 2020 and 3.02% for the second quarter of 2020. The reduction in the net interest margin compared to the prior year is due to lower market interest rates and the impact of PPP loans. As of September 30, 2020, approximately 42% of the Bank's variable-rate loans are indexed to prime and 71% of these loans are at or above interest rate floors.

Net Interest Income

Net interest income increased for the third quarter of 2020 compared to the third quarter of 2019 by $3.1 million, or 15.5%, and compared to the second quarter of 2020 by $1.6 million, or 7.4%. This was primarily due to an increase in average outstanding loans offset by lower yields on loans for the periods compared. Included in interest income for the third quarter of 2020 is the accretion of net deferred processing PPP loan fees of $2.1 million compared to $1.5 million in the second quarter of 2020. The Bank's core funding continues to be a strength with the cost of deposits at 0.07% for the third quarter of 2020 compared to 0.24% for same period a year ago.

On a year-to-date basis, net interest income was $65.1 million for the nine months ended September 30, 2020, compared to $58.1 million for the same period a year ago. The 12% increase was primarily due to significant loan growth between periods, partially offset by a lower net interest margin.

Non Interest Income

Non-interest income in the third quarter of 2020 was $1.4 million, representing a decrease of $362,000 or 20% compared to the second quarter of 2020 and an increase of $101,000, or 8% from the quarter a year ago. This was primarily due to a change in Bank/Corporate owned life insurance income, which is driven by the increase/decrease in the value of the policies that are invested in mutual funds.

On a year-to-date basis, Deposit Fees increased $334,000 from the period a year ago due to growth in commercial business customers and lower earnings credit. Non-interest income decreased as a result of a decline in gains on sale of SBA loans. Since mid-2019, the Bank has added most SBA loan originations to its loan portfolio. For the second and third quarter of 2020, International Fees declined due to the impact of the pandemic.

Non Interest Expense

Non-interest expense increased $929,000 for the quarter ended September 30, 2020 compared to the same quarter a year ago. The increase was primarily due to a $1 million increase in salaries and employee benefits. This is due to higher expenses related to the deferred compensation plan (DCP) as a result of the market performance of DCP investment balances, higher base salaries, and $117,000 of severance costs associated with a reduction in work force near the end of the third quarter. The efficiency ratio declined to 55% for the third quarter of 2020 compared to 59% for the third quarter of 2019.

For the third quarter of 2020, total non-interest expense decreased $287,000 compared to the second quarter of 2020. For the quarter, other non-interest expense declined $376,000 primarily due to a reduction in the reserve for off balance sheet commitments of $705,000. This was offset by an increase in the FDIC assessment of $291,000 associated with increased assets. The efficiency ratio declined to 55% for the third quarter of 2020 compared to 59% for the second quarter of 2020.

For the nine months ending September 30, 2020, total non-interest expense increased $1.6 million or 4% compared to the same period a year ago, primarily due to increased salaries and employee benefits, and other expense. The efficiency ratio was 57% and 61% for the nine months ended September 30, 2020 and 2019, respectively.

Full time equivalent employees at September 30, 2020 were 193 compared to 195 a year ago, and the same as June 30, 2020. For 2020, the average number of fulltime equivalent employees has increased by four. The Bank has 32 relationship managers in seven offices, an increase over year end and the prior quarter.

Balance Sheet

From December 31, 2019 to September 30, 2020, total assets increased $919 million, or 38%, to $3.3 billion, with 75% of the increase attributable to PPP loan originations. Total loans, excluding PPP loans, increased $281,000, to $1.49 billion from year-end as C&I line utilization declined significantly. At September 30, 2020 and June 30, 2020 the utilization rate for the Bank's commercial lines of credit was 27% compared to 35% at December 31, 2019.

The Bank purchased $186 million of municipal and U.S. Agency mortgage-backed securities during the third quarter with an estimated weighted average yield of 1.74%. The duration of the securities portfolio increased from 2.3 to 2.8 years from September 30, 2019 to September 30, 2020.

During the first nine months of 2020, total deposits grew by $884 million with a majority of the increase attributable to the proceeds of PPP loans. This increase was also due to new deposit relationships of approximately $200 million and existing customers maintaining higher liquidity as the economy slowed. At September 30, 2020, the tangible common equity ratio was 7.11%; excluding PPP loans, the tangible common equity ratio was 8.95%.

Asset Quality

At June 30, 2020 and September 30, 2020 non-performing assets totaled $2.8 million, representing 0.11% of total assets (excluding PPP loans) at September 30, 2020. The Bank continues to have no Other Real Estate Owned. Excluding PPP loans, loans that were past due, criticized and classifieds represented 0.07%, 8.56%, and 1.32%, respectively of total loans at September 30, 2020 compared to 0.26%, 6.55% and 1.22%, respectively of total loans at June 30, 2020. As of September 30, 2020, the allowance for loan losses stood at $22.9 million, or 1.54% of total loans (excluding PPP loans); compared to 1.4% at December 31, 2019. All PPP loans are 100% guaranteed by the SBA and as such, no allowance for loan losses is allocated to these loans. The Bank is required to adopt CECL, or Current Expected Credit Loss, on January 1, 2023. For the first nine months of 2020, the Bank recorded a total of $478,000 in net charge-offs on two commercial loans, representing annualized net charge offs of 0.03%. The Bank had no charge-offs in the third quarter of 2020.

In response to the COVID-19 pandemic, the Bank established a loan payment deferment program to assist its customers who are experiencing short-term financial or operational problems. As of September 30, 2020, there were six loans with a total principal balance of $19.8 million (0.9% of total loans) on a loan payment deferment program of which $7.8 million of loans previously granted a deferral received a second modification. At the time of origination, the loans currently granted deferrals were underwritten with a 56% average loan-to-value ratio. These loans are all backed by commercial real estate of which 79% are owner occupied. All payment deferrals granted to-date meet applicable requirements to continue accruing interest. As of September 30, 2020, 79% of clients whose first deferral concluded during the quarter resumed their scheduled payments.

ABOUT AMERICAN BUSINESS BANK

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. American Business Bank has six Loan Production Offices in strategic locations including: North Orange County in Anaheim, Orange County in Irvine, South Bay in Torrance, San Fernando Valley in Woodland Hills, Riverside County in Corona and Inland Empire in Ontario.

FORWARD LOOKING STATEMENTS

This communication contains certain forward-looking information about American Business Bank that is intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. Such statements include future financial and operating results, expectations, intentions and other statements that are not historical facts. Such statements are based on information available at the time of this communication and are based on current beliefs and expectations of the Bank's management and are subject to significant risks, uncertainties and contingencies, many of which are beyond our control. The COVID-19 pandemic is adversely affecting the national economy; the ultimate length and severity of its impact on the Bank's customers are uncertain. Actual results may differ materially from those set forth in the forward-looking statements due to a variety of factors, including various risk factors. We are under no obligation (and expressly disclaim any such obligation) to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

American Business BankFigures in $000, except shareand per share amounts BALANCE SHEETS (unaudited) September June December September

2020 2020 2019 2019

Assets: Cash and Due from Banks $ 69,786 $ 68,072 $ 31,673 $ 88,211

Interest Earning Deposits in 64,660 232,770 45,202 26,077 Other Financial Institutions Investment Securities: US Agencies 230,637 240,012 284,032 305,572

Mortgage Backed 359,974 313,119 292,126 226,338 Securities State and Municipals 243,933 133,128 78,520 74,824

US Treasuries 10,044 10,081 10,009 9,992

Corporate Bonds 12,480 19,502 19,805 19,861

Securities 857,068 715,842 684,492 636,587 Available-for-Sale, at Fair Value State and Municipals Securities 91,717 86,289 86,707 86,915 Held-to-Maturity, at Amortized Cost Federal Home Loan Bank 10,864 10,864 10,356 10,356 Stock, at Cost Total Investment 959,649 812,995 781,555 733,858 Securities Loans Receivable: Commercial Real Estate 1,047,100 1,007,655 982,070 954,424

Commercial and 362,258 370,786 423,868 402,167 Industrial SBA Payroll Protection 688,336 675,666 - - Program Residential Real Estate 74,170 71,112 76,481 68,259

Installment and Other 4,131 6,039 4,959 4,765

Total Loans 2,175,995 2,131,258 1,487,378 1,429,615 Receivable Allowance for (22,910 ) (22,399 ) (20,824 ) (20,014 ) Loan Losses Loans Receivable, 2,153,085 2,108,859 1,466,554 1,409,601 Net Furniture, Equipment and 8,145 8,520 9,023 8,700 Leasehold Improvements, Net Bank/Corporate Owned Life 27,013 26,651 26,448 26,110 Insurance Other Assets 39,041 37,396 41,456 39,087

Total Assets $ 3,321,379 $ 3,295,263 $ 2,401,911 $ 2,331,644

Liabilities: Non-Interest Bearing Demand $ 1,658,673 $ 1,684,662 $ 1,083,705 $ 1,084,152 Deposits Interest Bearing Transaction 228,585 204,133 215,730 221,196 Accounts Money Market and Savings 1,124,329 1,100,191 827,713 751,415 Deposits Certificates of Deposit 36,981 35,713 37,712 42,555

Total Deposits 3,048,568 3,024,699 2,164,860 2,099,318

Federal Home Loan Bank Advances - - - - / Other Borrowings Other Liabilities 36,822 43,206 30,386 31,258

Total Liabilities $ 3,085,390 $ 3,067,905 $ 2,195,246 $ 2,130,576

Shareholders' Equity: Common Stock $ 165,789 $ 165,032 $ 163,872 $ 163,464

Retained Earnings 66,233 58,359 46,784 40,795

Accumulated Other Comprehensive 3,967 3,967 (3,991 ) (3,191 ) Income / (Loss) Total Shareholders' $ 235,989 $ 227,358 $ 206,665 $ 201,068 Equity Total Liabilities and $ 3,321,379 $ 3,295,263 $ 2,401,911 $ 2,331,644 Shareholders' Equity Standby Letters of Credit $ 35,131 $ 37,259 $ 39,513 $ 39,722

Per Share Information: Common Shares Outstanding 7,926,833 7,904,105 7,850,171 7,834,279

Book Value Per Share $ 29.77 $ 28.76 $ 26.33 $ 25.67

Tangible Book Value Per Share $ 29.77 $ 28.76 $ 26.33 $ 25.67

American Business BankFigures in $000, except share and per share amountsINCOME STATEMENTS (unaudited)For the three months ended:SeptemberJuneSeptember2020

2020

2019

Interest Income:Interest and Fees on Loans$

19,793

$

19,169

$

16,890

Interest on Investment Securities4,048

3,084

4,260

Interest on Interest Earning Depositsin Other Financial Institutions71

93

332

Total Interest Income23,912

22,346

21,482

Interest Expense:Interest on Interest Bearing Transaction Accounts41

37

152

Interest on Money Market and Savings Deposits499

538

1,041

Interest on Certificates of Deposits21

28

73

Interest on Federal Home Loan Bank Advancesand Other Borrowings-

-

1

Total Interest Expense561

603

1,267

Net Interest Income23,351

21,743

20,215

Provision for Loan Losses450

680

1,460

Net Interest Income after Provision for Loan Losses22,901

21,063

18,755

Non-Interest Income:Deposit Fees677

640

553

International Fees237

244

328

Gain (Loss) on Sale of Investment Securities, Net(32

)

(184

)

(122

)

Gain on Sale of SBA Loans, Net-

-

87

Bank/Corporate Owned Life Insurance Income (Expense)361

953

135

Other191

143

352

Total Non-Interest Income1,434

1,796

1,333

Non-Interest Expense:Salaries and Employee Benefits9,494

9,384

8,444

Occupancy and Equipment966

953

888

Professional Services1,663

1,627

1,946

Promotion Expenses197

267

361

Other1,317

1,693

1,069

Total Non-Interest Expense13,637

13,924

12,708

Earnings before income taxes10,698

8,935

7,380

Income Tax Expense2,824

2,200

1,963

NET INCOME$

7,874

$

6,735

$

5,417

Add back:After-Tax Gain (Loss) on Sale of Investment Securities, Net$

23

$

139

$

90

After-Tax DCP ABB Stock Expense (Benefit)$

-

$

-

$

-

Core Net Income$

7,897

$

6,874

$

5,507

Per Share Information:Earnings Per Share - Basic$

0.98

$

0.84

$

0.68

Earnings Per Share - Diluted$

0.97

$

0.83

$

0.67

Core Earnings Per Share - Diluted$

0.97

$

0.85

$

0.68

Weighted Average Shares - Basic8,070,598

8,046,122

7,999,146

Weighted Average Shares - Diluted8,109,487

8,097,354

8,100,992

American Business BankFigures in $000, except share andper share amounts INCOME STATEMENTS (unaudited) For the three months ended: September June September 2020 2020 2019

Interest Income: Interest and Fees on $ 19,793 $ 19,169 $ 16,890 Loans Interest on Investment 4,048 3,084 4,260 Securities Interest on Interest Earning Deposits in Other Financial 71 93 332 Institutions Total Interest Income 23,912 22,346 21,482

Interest Expense: Interest on Interest Bearing 41 37 152 Transaction Accounts Interest on Money Market and 499 538 1,041 Savings Deposits Interest on Certificates of 21 28 73 Deposits Interest on Federal Home Loan Bank Advances and Other Borrowings - - 1

Total Interest Expense 561 603 1,267

Net Interest Income 23,351 21,743 20,215

Provision for Loan 450 680 1,460 LossesNet Interest Income after 22,901 21,063 18,755 Provision for Loan Losses Non-Interest Income: Deposit Fees 677 640 553

International Fees 237 244 328

Gain (Loss) on Sale of Investment (32 ) (184 ) (122 ) Securities, Net Gain on Sale of SBA Loans, Net - - 87

Bank/Corporate Owned Life 361 953 135 Insurance Income (Expense) Other 191 143 352

Total Non-Interest Income 1,434 1,796 1,333

Non-Interest Expense: Salaries and Employee Benefits 9,494 9,384 8,444

Occupancy and Equipment 966 953 888

Professional Services 1,663 1,627 1,946

Promotion Expenses 197 267 361

Other 1,317 1,693 1,069

Total Non-Interest Expense 13,637 13,924 12,708

Earnings before income 10,698 8,935 7,380 taxes Income Tax Expense 2,824 2,200 1,963

NET INCOME $ 7,874 $ 6,735 $ 5,417

Addback: After-Tax Gain (Loss) on Sale of $ 23 $ 139 $ 90 Investment Securities, Net After-Tax DCP ABB Stock Expense $ - $ - $ - (Benefit)Core Net Income $ 7,897 $ 6,874 $ 5,507

Per Share Information: Earnings Per Share - $ 0.98 $ 0.84 $ 0.68 Basic Earnings Per Share - Diluted $ 0.97 $ 0.83 $ 0.67

Core Earnings Per Share - $ 0.97 $ 0.85 $ 0.68 Diluted Weighted Average Shares - 8,070,598 8,046,122 7,999,146 Basic Weighted Average Shares - 8,109,487 8,097,354 8,100,992 Diluted American Business BankFigures in $000, except share and per share amountsINCOME STATEMENTS (unaudited)For the nine months ended:SeptemberSeptember2020

2019

Interest Income:Interest and Fees on Loans$

56,257

$

47,813

Interest on Investment Securities11,045

12,678

Interest on Interest Earning Depositsin Other Financial Institutions217

1,098

Total Interest Income67,519

61,589

Interest Expense:Interest on Interest Bearing Transaction Accounts182

363

Interest on Money Market and Savings Deposits2,004

2,804

Interest on Certificates of Deposits90

293

Interest on Federal Home Loan Bank Advancesand Other Borrowings131

15

Total Interest Expense2,407

3,475

Net Interest Income65,112

58,114

Provision for Loan Losses2,564

2,478

Net Interest Income after Provision for Loan Losses62,548

55,636

Non-Interest Income:Deposit Fees1,932

1,598

International Fees763

841

Gain (Loss) on Sale of Investment Securities, Net(168

)

(267

)

Gain on Sale of SBA Loans, Net19

327

Bank/Corporate Owned Life Insurance Income (Expense)564

782

Other532

866

Total Non-Interest Income3,642

4,147

Non-Interest Expense:Salaries and Employee Benefits27,097

26,461

Occupancy and Equipment2,839

2,956

Professional Services4,772

4,340

Promotion Expenses830

946

Other4,070

3,324

Total Non-Interest Expense39,608

38,027

Earnings before income taxes26,582

21,756

Income Tax Expense7,134

5,668

NET INCOME$

19,448

$

16,088

Add back:After-Tax Gain (Loss) on Sale of Investment Securities, Net$

123

$

198

After-Tax DCP ABB Stock Expense (Benefit)$

-

$

449

Core Net Income$

19,571

$

16,735

Per Share Information:Earnings Per Share - Basic$

2.42

$

2.02

Earnings Per Share - Diluted$

2.40

$

1.99

Core Earnings Per Share - Diluted$

2.41

$

2.07

Weighted Average Shares - Basic8,050,992

7,948,632

Weighted Average Shares - Diluted8,109,732

8,078,529

American Business BankFigures in $000, except share and per shareamounts INCOME STATEMENTS (unaudited) For the nine months ended: September September 2020 2019

Interest Income: Interest and Fees on Loans $ 56,257 $ 47,813

Interest on Investment Securities 11,045 12,678

Interest on Interest Earning Deposits in Other Financial 217 1,098 Institutions Total Interest Income 67,519 61,589

Interest Expense: Interest on Interest Bearing Transaction 182 363 Accounts Interest on Money Market and Savings Deposits 2,004 2,804

Interest on Certificates of Deposits 90 293

Interest on Federal Home Loan Bank Advances and Other Borrowings 131 15

Total Interest Expense 2,407 3,475

Net Interest Income 65,112 58,114

Provision for Loan Losses 2,564 2,478

Net Interest Income after Provision for Loan 62,548 55,636 Losses Non-Interest Income: Deposit Fees 1,932 1,598

International Fees 763 841

Gain (Loss) on Sale of Investment Securities, (168 ) (267 ) Net Gain on Sale of SBA Loans, Net 19 327

Bank/Corporate Owned Life Insurance Income 564 782 (Expense) Other 532 866

Total Non-Interest Income 3,642 4,147

Non-Interest Expense: Salaries and Employee Benefits 27,097 26,461

Occupancy and Equipment 2,839 2,956

Professional Services 4,772 4,340

Promotion Expenses 830 946

Other 4,070 3,324

Total Non-Interest Expense 39,608 38,027

Earnings before income taxes 26,582 21,756

Income Tax 7,134 5,668 Expense NET INCOME $ 19,448 $ 16,088

Add back: After-Tax Gain (Loss) on Sale of Investment $ 123 $ 198 Securities, Net After-Tax DCP ABB Stock Expense (Benefit) $ - $ 449

Core Net Income $ 19,571 $ 16,735

Per Share Information: Earnings Per Share - Basic $ 2.42 $ 2.02

Earnings Per Share - Diluted $ 2.40 $ 1.99

Core Earnings Per Share - Diluted $ 2.41 $ 2.07

Weighted Average Shares - Basic 8,050,992 7,948,632

Weighted Average Shares - Diluted 8,109,732 8,078,529

American Business BankFigures in $000QUARTERLY AVERAGE BALANCE SHEETS AND YIELD ANALYSIS (unaudited)For the three months ended:September 2020June 2020AverageInterestAverageAverageInterestAverageBalanceInc/ExpYield/RateBalanceInc/ExpYield/RateInterest Earning Assets:Interest Earning Deposits in Other Financial Institutions$

191,948

$

71

0.15

%

$

264,722

$

93

0.14

%

Investment Securities:US Agencies237,419

429

0.72

%

260,033

270

0.41

%

Mortgage Backed Securities325,904

1,541

1.89

%

271,173

1,434

2.12

%

State and Municipals271,133

1,700

2.51

%

174,950

1,196

2.73

%

US Treasuries10,011

37

1.46

%

10,018

37

1.48

%

Corporate Bonds16,479

126

3.07

%

19,908

147

2.95

%

Securities Available-for-Sale and Held-to-Maturity860,946

3,833

1.78

%

736,082

3,084

1.68

%

Federal Home Loan Bank Stock10,864

215

7.90

%

10,753

-

0.00

%

Total Investment Securities871,810

4,048

1.86

%

746,835

3,084

1.65

%

Loans Receivable:Commercial Real Estate1,026,594

11,179

4.33

%

1,003,318

11,031

4.42

%

Commercial and Industrial364,750

3,987

4.35

%

402,179

4,380

4.38

%

SBA Payroll Protection Program683,495

3,837

2.23

%

539,535

2,994

2.23

%

Residential Real Estate73,291

734

3.98

%

70,984

705

4.00

%

Installment and Other4,817

56

4.65

%

5,037

59

4.75

%

Total Loans Receivable2,152,947

19,793

3.66

%

2,021,053

19,169

3.81

%

Total Interest Earning Assets$

3,216,705

$

23,912

2.91

%

$

3,032,610

$

22,346

2.91

%

Liabilities:Non-Interest Bearing Demand Deposits1,675,885

-

0.00

%

1,624,250

-

0.00

%

Interest Bearing Transaction Accounts215,041

41

0.08

%

201,439

37

0.07

%

Money Market and Savings Deposits1,132,664

499

0.18

%

1,027,292

538

0.21

%

Certificates of Deposit36,848

21

0.23

%

35,614

28

0.31

%

Total Deposits3,060,438

561

0.07

%

2,888,595

603

0.08

%

Federal Home Loan Bank Advances / Other Borrowings-

-

0.00

%

-

-

0.00

%

Total Interest Bearing Deposits and Borrowings1,384,553

561

0.16

%

1,264,345

603

0.19

%

Total Deposits and Borrowings$

3,060,438

$

561

0.07

%

$

2,888,595

$

603

0.08

%

Net Interest Income$

23,351

$

21,743

Net Interest Rate Spread2.84

%

2.83

%

Net Interest Margin2.89

%

2.88

%

Net Interest Margin, excluding SBA PPP3.06

%

3.02

%

American Business BankFigures in $000 QUARTERLY AVERAGE BALANCE SHEETS AND YIELDANALYSIS (unaudited) For the three months ended: September 2020 June 2020 Average Interest Average Average Interest Average Balance Inc/Exp Yield/ Balance Inc/Exp Yield/ Rate RateInterest Earning Assets: Interest Earning Deposits in $ 191,948 $ 71 0.15 % $ 264,722 $ 93 0.14 % Other Financial Institutions Investment Securities: US Agencies 237,419 429 0.72 % 260,033 270 0.41 %

Mortgage Backed 325,904 1,541 1.89 % 271,173 1,434 2.12 % Securities State and 271,133 1,700 2.51 % 174,950 1,196 2.73 % Municipals US Treasuries 10,011 37 1.46 % 10,018 37 1.48 %

Corporate Bonds 16,479 126 3.07 % 19,908 147 2.95 %

Securities Available-for-Sale 860,946 3,833 1.78 % 736,082 3,084 1.68 % and Held-to-Maturity Federal Home Loan 10,864 215 7.90 % 10,753 - 0.00 % Bank Stock Total Investment 871,810 4,048 1.86 % 746,835 3,084 1.65 % Securities Loans Receivable: Commercial Real 1,026,594 11,179 4.33 % 1,003,318 11,031 4.42 % Estate Commercial and 364,750 3,987 4.35 % 402,179 4,380 4.38 % Industrial SBA Payroll 683,495 3,837 2.23 % 539,535 2,994 2.23 % Protection Program Residential Real 73,291 734 3.98 % 70,984 705 4.00 % Estate Installment and 4,817 56 4.65 % 5,037 59 4.75 % Other Total Loans 2,152,947 19,793 3.66 % 2,021,053 19,169 3.81 % Receivable Total Interest Earning $ 3,216,705 $ 23,912 2.91 % $ 3,032,610 $ 22,346 2.91 % Assets Liabilities: Non-Interest Bearing Demand 1,675,885 - 0.00 % 1,624,250 - 0.00 % Deposits Interest Bearing Transaction 215,041 41 0.08 % 201,439 37 0.07 % Accounts Money Market and Savings 1,132,664 499 0.18 % 1,027,292 538 0.21 % Deposits Certificates of Deposit 36,848 21 0.23 % 35,614 28 0.31 %

Total Deposits 3,060,438 561 0.07 % 2,888,595 603 0.08 %

Federal Home Loan Bank - - 0.00 % - - 0.00 % Advances / Other Borrowings Total Interest Bearing 1,384,553 561 0.16 % 1,264,345 603 0.19 % Deposits and Borrowings Total Deposits and $ 3,060,438 $ 561 0.07 % $ 2,888,595 $ 603 0.08 % Borrowings Net Interest Income $ 23,351 $ 21,743

Net Interest Rate Spread 2.84 % 2.83 %

Net Interest Margin 2.89 % 2.88 %

Net Interest Margin, 3.06 % 3.02 % excluding SBA PPPAmerican Business BankFigures in $000QUARTERLY AVERAGE BALANCE SHEETS AND YIELD ANALYSIS (unaudited)For the three months ended:September 2020September 2019AverageInterestAverageAverageInterestAverageBalanceInc/ExpYield/RateBalanceInc/ExpYield/RateInterest Earning Assets:Interest Earning Deposits in Other Financial Institutions$

191,948

$

71

0.15

%

$

58,676

$

332

2.30

%

Investment Securities:US Agencies237,419

429

0.72

%

351,204

1,406

1.60

%

Mortgage Backed Securities325,904

1,541

1.89

%

208,820

1,422

2.72

%

State and Municipals271,133

1,700

2.51

%

159,861

1,094

2.74

%

US Treasuries10,011

37

1.46

%

10,039

37

1.46

%

Corporate Bonds16,479

126

3.07

%

15,328

118

3.07

%

Securities Available-for-Sale and Held-to-Maturity860,946

3,833

1.78

%

745,252

4,077

2.19

%

Federal Home Loan Bank Stock10,864

215

7.90

%

10,356

183

7.05

%

Total Investment Securities871,810

4,048

1.86

%

755,608

4,260

2.25

%

Loans Receivable:Commercial Real Estate1,026,594

11,179

4.33

%

917,398

10,957

4.74

%

Commercial and Industrial364,750

3,987

4.35

%

385,315

4,996

5.14

%

SBA Payroll Protection Program683,495

3,837

2.23

%

-

-

0.00

%

Residential Real Estate73,291

734

3.98

%

66,512

891

5.32

%

Installment and Other4,817

56

4.65

%

5,159

46

3.58

%

Total Loans Receivable2,152,947

19,793

3.66

%

1,374,384

16,890

4.88

%

Total Interest Earning Assets$

3,216,705

$

23,912

2.91

%

$

2,188,668

$

21,482

3.84

%

Liabilities:Non-Interest Bearing Demand Deposits1,675,885

-

0.00

%

1,059,710

-

0.00

%

Interest Bearing Transaction Accounts215,041

41

0.08

%

208,403

152

0.29

%

Money Market and Savings Deposits1,132,664

499

0.18

%

746,947

1,041

0.55

%

Certificates of Deposit36,848

21

0.23

%

50,425

73

0.57

%

Total Deposits3,060,438

561

0.07

%

2,065,485

1,266

0.24

%

Federal Home Loan Bank Advances / Other Borrowings-

-

0.00

%

163

1

2.27

%

Total Interest Bearing Deposits and Borrowings1,384,553

561

0.16

%

1,005,938

1,267

0.50

%

Total Deposits and Borrowings$

3,060,438

$

561

0.07

%

$

2,065,647

$

1,267

0.24

%

Net Interest Income$

23,351

$

20,215

Net Interest Rate Spread2.84

%

3.60

%

Net Interest Margin2.89

%

3.66

%

Net Interest Margin, excluding SBA PPP3.06

%

3.66

%

American Business BankFigures in $000 QUARTERLY AVERAGE BALANCE SHEETS AND YIELDANALYSIS (unaudited) For the three months ended: September 2020 September 2019 Average Interest Average Average Interest Average Balance Inc/Exp Yield/ Balance Inc/Exp Yield/ Rate RateInterest Earning Assets: Interest Earning Deposits in $ 191,948 $ 71 0.15 % $ 58,676 $ 332 2.30 % Other Financial Institutions Investment Securities: US Agencies 237,419 429 0.72 % 351,204 1,406 1.60 %

Mortgage Backed 325,904 1,541 1.89 % 208,820 1,422 2.72 % Securities State and 271,133 1,700 2.51 % 159,861 1,094 2.74 % Municipals US Treasuries 10,011 37 1.46 % 10,039 37 1.46 %

Corporate Bonds 16,479 126 3.07 % 15,328 118 3.07 %

Securities Available-for-Sale 860,946 3,833 1.78 % 745,252 4,077 2.19 % and Held-to-Maturity Federal Home Loan 10,864 215 7.90 % 10,356 183 7.05 % Bank Stock Total Investment 871,810 4,048 1.86 % 755,608 4,260 2.25 % Securities Loans Receivable: Commercial Real 1,026,594 11,179 4.33 % 917,398 10,957 4.74 % Estate Commercial and 364,750 3,987 4.35 % 385,315 4,996 5.14 % Industrial SBA Payroll 683,495 3,837 2.23 % - - 0.00 % Protection Program Residential Real 73,291 734 3.98 % 66,512 891 5.32 % Estate Installment and 4,817 56 4.65 % 5,159 46 3.58 % Other Total Loans 2,152,947 19,793 3.66 % 1,374,384 16,890 4.88 % Receivable Total Interest Earning $ 3,216,705 $ 23,912 2.91 % $ 2,188,668 $ 21,482 3.84 % Assets Liabilities: Non-Interest Bearing Demand 1,675,885 - 0.00 % 1,059,710 - 0.00 % Deposits Interest Bearing Transaction 215,041 41 0.08 % 208,403 152 0.29 % Accounts Money Market and Savings 1,132,664 499 0.18 % 746,947 1,041 0.55 % Deposits Certificates of Deposit 36,848 21 0.23 % 50,425 73 0.57 %

Total Deposits 3,060,438 561 0.07 % 2,065,485 1,266 0.24 %

Federal Home Loan Bank - - 0.00 % 163 1 2.27 % Advances / Other Borrowings Total Interest Bearing 1,384,553 561 0.16 % 1,005,938 1,267 0.50 % Deposits and Borrowings Total Deposits and $ 3,060,438 $ 561 0.07 % $ 2,065,647 $ 1,267 0.24 % Borrowings Net Interest Income $ 23,351 $ 20,215

Net Interest Rate Spread 2.84 % 3.60 %

Net Interest Margin 2.89 % 3.66 %

Net Interest Margin, 3.06 % 3.66 % excluding SBA PPP American Business BankFigures in $000YEAR-TO-DATE AVERAGE BALANCE SHEETS AND YIELD ANALYSIS (unaudited)For the nine months ended:September 2020September 2019AverageInterestAverageAverageInterestAverageBalanceInc/ExpYield/RateBalanceInc/ExpYield/RateInterest Earning Assets:Interest Earning Deposits with Other Financial Institutions$

161,520

$

217

0.18

%

$

61,271

$

1,098

2.42

%

Investment Securities:US Agencies258,359

1,376

0.71

%

395,511

4,612

1.55

%

Mortgage Backed Securities294,904

4,718

2.13

%

183,086

3,903

2.84

%

State and Municipals203,326

4,018

2.63

%

162,505

3,351

2.75

%

US Treasuries10,018

110

1.47

%

10,046

111

1.47

%

Corporate Bonds18,770

423

3.00

%

6,732

159

3.15

%

Securities Available-for-Sale and Held-to-Maturity785,377

10,645

1.81

%

757,880

12,136

2.14

%

Federal Home Loan Bank Stock10,658

400

5.01

%

10,356

542

6.97

%

Total Investment Securities796,035

11,045

1.85

%

768,236

12,678

2.20

%

Loans Receivable:Commercial Real Estate1,011,829

33,553

4.43

%

873,209

30,901

4.73

%

Commercial and Industrial400,905

13,391

4.46

%

366,111

14,308

5.23

%

SBA Payroll Protection Program408,683

6,832

2.23

%

-

-

0.00

%

Residential Real Estate73,525

2,325

4.22

%

62,286

2,487

5.34

%

Installment and Other5,166

156

4.04

%

4,949

117

3.17

%

Total Loans Receivable1,900,108

56,257

3.95

%

1,306,555

47,813

4.89

%

Total Interest Earning Assets$

2,857,663

$

67,519

3.10

%

$

2,136,062

$

61,589

3.80

%

Liabilities:Non-Interest Bearing Demand Deposits1,469,001

-

0.00

%

1,021,107

-

0.00

%

Interest Bearing Transaction Accounts206,276

182

0.12

%

201,985

363

0.24

%

Money Market and Savings Deposits989,554

2,004

0.27

%

735,682

2,804

0.51

%

Certificates of Deposit36,298

90

0.33

%

61,515

293

0.64

%

Total Deposits2,701,129

2,276

0.11

%

2,020,289

3,460

0.23

%

Federal Home Loan Bank Advances / Other Borrowings10,533

131

1.66

%

738

15

2.63

%

Total Interest Bearing Deposits and Borrowings1,242,661

2,407

0.26

%

999,920

3,475

0.46

%

Total Deposits and Borrowings$

2,711,662

$

2,407

0.12

%

$

2,021,027

$

3,475

0.23

%

Net Interest Income$

65,112

$

58,114

Net Interest Rate Spread2.98

%

3.57

%

Net Interest Margin3.04

%

3.64

%

Net Interest Margin, excluding SBA PPP3.18

%

3.64

%

American Business BankFigures in $000 YEAR-TO-DATE AVERAGE BALANCE SHEETS ANDYIELD ANALYSIS (unaudited) For the nine months ended: September 2020 September 2019 Average Interest Average Average Interest Average Balance Inc/Exp Yield/ Balance Inc/Exp Yield/ Rate RateInterest Earning Assets: Interest Earning Deposits $ 161,520 $ 217 0.18 % $ 61,271 $ 1,098 2.42 % with Other Financial Institutions Investment Securities: US Agencies 258,359 1,376 0.71 % 395,511 4,612 1.55 %

Mortgage Backed 294,904 4,718 2.13 % 183,086 3,903 2.84 % Securities State and 203,326 4,018 2.63 % 162,505 3,351 2.75 % Municipals US Treasuries 10,018 110 1.47 % 10,046 111 1.47 %

Corporate Bonds 18,770 423 3.00 % 6,732 159 3.15 %

Securities Available-for-Sale 785,377 10,645 1.81 % 757,880 12,136 2.14 % and Held-to-Maturity Federal Home Loan 10,658 400 5.01 % 10,356 542 6.97 % Bank Stock Total Investment 796,035 11,045 1.85 % 768,236 12,678 2.20 % Securities Loans Receivable: Commercial Real 1,011,829 33,553 4.43 % 873,209 30,901 4.73 % Estate Commercial and 400,905 13,391 4.46 % 366,111 14,308 5.23 % Industrial SBA Payroll 408,683 6,832 2.23 % - - 0.00 % Protection Program Residential Real 73,525 2,325 4.22 % 62,286 2,487 5.34 % Estate Installment and 5,166 156 4.04 % 4,949 117 3.17 % Other Total Loans 1,900,108 56,257 3.95 % 1,306,555 47,813 4.89 % Receivable Total Interest Earning $ 2,857,663 $ 67,519 3.10 % $ 2,136,062 $ 61,589 3.80 % Assets Liabilities: Non-Interest Bearing Demand 1,469,001 - 0.00 % 1,021,107 - 0.00 % Deposits Interest Bearing Transaction 206,276 182 0.12 % 201,985 363 0.24 % Accounts Money Market and Savings 989,554 2,004 0.27 % 735,682 2,804 0.51 % Deposits Certificates of Deposit 36,298 90 0.33 % 61,515 293 0.64 %

Total Deposits 2,701,129 2,276 0.11 % 2,020,289 3,460 0.23 %

Federal Home Loan Bank 10,533 131 1.66 % 738 15 2.63 % Advances / Other Borrowings Total Interest Bearing 1,242,661 2,407 0.26 % 999,920 3,475 0.46 % Deposits and Borrowings Total Deposits and $ 2,711,662 $ 2,407 0.12 % $ 2,021,027 $ 3,475 0.23 % Borrowings Net Interest Income $ 65,112 $ 58,114

Net Interest Rate Spread 2.98 % 3.57 %

Net Interest Margin 3.04 % 3.64 %

Net Interest Margin, 3.18 % 3.64 % excluding SBA PPP American Business BankFigures in $000SUPPLEMENTAL DATA (unaudited)SeptemberJuneDecemberSeptember2020

2020

2019

2019

Performance Ratios:Quarterly:Return on Average Assets (ROAA)0.95

%

0.86

%

0.99

%

0.95

%

Core Return on Average Assets (ROAA)0.95

%

0.87

%

0.99

%

0.96

%

Return on Average Equity (ROAE)13.53

%

12.14

%

11.74

%

11.03

%

Core Return on Average Equity (ROAE)13.57

%

12.39

%

11.74

%

11.22

%

Efficiency Ratio54.95

%

58.70

%

58.77

%

58.64

%

Year-to-DateReturn on Average Assets (ROAA)0.87

%

0.83

%

0.97

%

0.96

%

Core Return on Average Assets (ROAA)0.88

%

0.84

%

1.00

%

1.00

%

Return on Average Equity (ROAE)11.67

%

10.68

%

11.80

%

11.83

%

Core Return on Average Equity (ROAE)11.75

%

10.77

%

12.15

%

12.30

%

Efficiency Ratio57.47

%

58.88

%

60.29

%

60.82

%

Core Efficiency Ratio57.47

%

58.88

%

59.57

%

59.84

%

Capital Adequacy:Total Risk Based Capital Ratio14.54

%

14.64

%

13.82

%

13.81

%

Common Equity Tier 1 Capital Ratio13.29

%

13.38

%

12.57

%

12.56

%

Tier 1 Risk Based Capital Ratio13.29

%

13.38

%

12.57

%

12.56

%

Tier 1 Leverage Ratio6.97

%

7.10

%

8.66

%

8.91

%

Tangible Common Equity / Tangible Assets7.11

%

6.90

%

8.60

%

8.62

%

Asset Quality OverviewNon-Performing Loans$

2,563

$

2,601

$

1,855

$

1,481

Loans 90+ Days Past Due and Still Accruing-

-

-

-

Total Non-Performing Loans2,563

2,601

1,855

1,481

Restructured Loans221

223

227

229

Other Real Estate Owned-

-

-

-

ALLL / Loans Receivable1.05

%

1.05

%

1.40

%

1.40

%

Non-Performing Loans / Total Loans Receivable *0.13

%

0.13

%

0.14

%

0.12

%

Non-Performing Loans / Total Loans Receivable *, excluding PPP **0.19

%

0.19

%

0.14

%

0.12

%

Non-Performing Assets / Total Assets *0.08

%

0.09

%

0.09

%

0.07

%

Non-Performing Assets / Total Assets *, excluding PPP **0.11

%

0.11

%

0.09

%

0.07

%

Net Charge-Offs (Recoveries) quarterly$

(60

)

$

168

$

(8

)

$

(6

)

Net Charge-Offs (Recoveries) year-to-date$

478

$

538

$

(41

)

$

(33

)

Net Charge-Offs (Recoveries) year-to-date / Average0.03

%

0.03

%

0.00

%

0.00

%

Loans Receivable*

Includes non-accrual loans, accruing loans past due 90+ days and Troubled Debt Restructurings (TDRs).**

SBA Paycheck Protection Program (PPP) View source version on businesswire.com: https://www.businesswire.com/news/home/20201029005372/en/

CONTACT: Karen Schoenbaum EVP/CFO (213) 430-4000 www.americanbb.bank