Business Wire | Jul 24, 2020 09:05AM EDT

Robust SBA PPP Fundings Boost Record Net Income

Jul. 24, 2020

LOS ANGELES--(BUSINESS WIRE)--Jul. 24, 2020--American Business Bank(OTCQX: AMBZ) today reported record net income of $6.7 million or $0.83 per fully diluted share for the second quarter of 2020 compared to $5.3 million or $0.66 per fully diluted share for the second quarter of 2019. The increase was primarily due to significant PPP loan originations during the quarter which increased net interest income but reduced net interest margin.

"Although much uncertainty exists from the pandemic, we are confident for the future based upon the resilience and financial strength of our outstanding customer base. Additionally our significant participation in the PPP program makes us hopeful our clients received the economic boost to move forward in a positive manner, making the proper adjustment to not only survive but to flourish. The program provided unprecedented liquidity in April to our customers who did not know what the new normal would look like. Most of our customers did not shut down but adapted to remote work like the Bank. We have taken an aggressive stance in downgrading credits, but a vast amount of our customers are proactive and are good managers of their businesses and are taking the necessary steps to survive. This is reflected in the continued strong credit metrics of the Bank and is a result of our prudent lending approach in our evaluation of businesses."

"Furthermore, the Bank is providing the same responsiveness and service we demonstrated in the PPP origination process by assisting clients with a professional accounting firm to ensure our customers meet the SBA requirements to maximize loan forgiveness. At PPP loan payoff, the Bank stands to earn a noteworthy amount of fees to offset the effects of the lower interest rate environment we find ourselves in. Another reason I'm optimistic is the strong pipeline of new business for the Bank as our PPP performance has attracted prospects at a time when our high touch service is appreciated more than ever," said Leon Blankstein, ABB's President, CEO and Director.

For the quarter ending June 30, 2020, net income was $6.7 million or $0.83 per fully diluted share, compared to net income of $4.8 million or $0.60 per fully diluted share for the first quarter of 2020. Net interest income for the second quarter was $21.7 million, or 9% higher than the first quarter of 2020 as PPP loan interest of $3 million was partially offset by lower rates on earning assets, while the cost of deposits declined 13 basis points to 0.08%. The increase in net income was also attributable to a $1.7 million increase in Bank/Corporate Owned Life Insurance income offset by a $1.2 million increase in salaries and employee benefits. Furthermore, as outstanding loans excluding PPP declined in the second quarter the provision for loan loss was $680,000 compared to $1.4 million recorded in the first quarter. The allowance for loan losses as a percentage of loans, excluding PPP loans, increased from 1.42% at March 31, 2020 to 1.54% at June 30, 2020.

Net income was $11.6 million or $1.43 per fully diluted share for the six months ended June 30, 2020, compared to $10.7 million or $1.32 per fully diluted share for the six months ended June 30, 2019. The increase was primarily due to significant loan growth between periods, partially offset by lower interest margin resulting in increased net interest income. The provision for loan losses increased $1.1 million primarily as a result of loan growth between periods, as well as a higher level of allowance in response to uncertainty caused by the COVID-19 pandemic.

PPP loans represent 45% of total loans as of March 31, 2020 with the participation of 46% of our customer base. These efforts helped to protect approximately 50,000 jobs in the business community served by the Bank. This influx of cash to the Bank's existing commercial customers has helped to alleviate any deterioration in their operations for the time being. The following table shows the details of the PPP loans originated during the second quarter of 2020:

Funded Average loanLoan Size by Tier Count size (Dollars in '000) (Dollars in '000)

Less than $350,000 518 $75,438 $146

$350,000 to less than $2 465 388,116 835million

$2 million and greater 73 229,066 3,138

1056 $692,620 $656



Weighted average processing fee 2.57% %

Net Interest Margin

The Bank's net interest margin for the second quarter of 2020 was 2.88% compared to 3.61% in the second quarter of 2019, and 3.47% in the first quarter of 2020. Excluding the impact of PPP loans, net interest margin for the second quarter of 2020 was 3.02%. The decrease was primarily due to a reduction in market interest rates while the mix of non-interest bearing deposits to total deposits remains at 50% or more. The loan to deposit ratio increased to 70% for the second quarter of 2020 compared to 68% for the first quarter of 2020 and 66% for the second quarter of 2019. Despite the contraction in the Bank's net interest margin, there continues to be a shift to higher earning assets. As of June 30, 2020, approximately 44% of the Bank's variable-rate loans are indexed to prime and 69% of these loans are at or above their floor.

Net Interest Income

Net interest income increased for the second quarter of 2020 compared to the second quarter of 2019 by $2.7 million, or 14%, and compared to the first quarter of 2020 by $1.7 million, or 9%. These increases were due to an increase in average outstanding loans offset by lower yields on all interest earning assets for the periods compared. Included in interest income for the second quarter of 2020 is the accretion of net deferred processing fees of $1.5 million for PPP loans. The Bank's core funding continues to be a strength with the cost of deposits at 0.08% for the second quarter of 2020 compared to 0.24% for same period a year ago.

On a year-to-date basis, net interest income was $41.8 million for the six months ended June 30, 2020, compared to $37.9 million for the same period a year ago. The 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 second quarter of 2020 was $1.8 million, representing an increase of $454,000, or 34% from the quarter a year ago, and an increase of $1.4 million compared to the first quarter of 2020. The increase from the second quarter of 2019 was attributable to an increase in Bank/Corporate owned life insurance income of $753,000, which is driven by the increase in the value of the policies that are invested in mutual funds. This increase was partially offset by a $161,000 decline in gains on sale of SBA loans as the Bank started to portfolio more SBA loans to add to its interest earning asset base since 2019. Compared to the first quarter of 2020, non-interest income also increased primarily due to a $1.7 million increase in Bank/Corporate owned life insurance income, offset by an $184,000 net loss on the sale of SBA investment securities realized in the recent quarter. On a year-to-date basis, Deposit and International Fees increased $224,000 from the period a year ago due to growth in commercial business customers. For the second quarter of 2020, International Fees declined due to the impact of the pandemic.

Non Interest Expense

Non-interest expense increased $1.6 million for the quarter ended June 30, 2020 compared to the same quarter a year ago. The increase was predominantly due to an $810,000 increase in salaries expense, a $431,000 increase in professional services expense and a $533,000 increase in other non-interest expense. The increase in salaries expense is primarily due to higher deferred compensation plan (DCP) cost as a result of better market performances on other mutual fund measurement balances, and higher full time equivalent employees at June 30, 2020 over the prior year. In other non-interest expense, the provision for off-balance-sheet commitments increased $687,000 due to reduced utilization percentages. The efficiency ratio declined to 59% for the second quarter of 2020 compared to 60% for the second quarter of 2019.

Compared to the first quarter of 2020, non-interest expense increased $1.9 million primarily due to a $1.2 million increase in salaries and employee benefits expense and a $635,000 increase in other non-interest expense. The increase in salaries expense is mainly due to the following:

* Higher DCP cost as a result of better market performances on other mutual fund measurement balances, resulting in an $894,000 DCP expense recorded in the recent quarter compared to an $837,000 DCP benefit recorded in the prior quarter; * Higher overtime and bonus expenses associated with PPP originations net of related deferred costs for PPP origination activities.

In other non-interest expense, the provision for off-balance sheet commitments increased $706,000 due to reduced utilization percentages, and deposit insurance assessments increased $117,000 as the Bank received a Small Bank Assessment Credit of the same amount from the FDIC during the first quarter of 2020 to offset regular deposit insurance assessments. The Bank did not receive such credit in the recent quarter. The efficiency ratio was 59% for the second and first quarters of 2020.

On a year-to-date basis, non-interest expense for the six months ended June 30, 2020 increased $654,000 or 3% compared to the same period a year ago, predominantly due to higher professional services expense. The efficiency ratio was 59% and 62% for the six months ended June 30, 2020 and 2019, respectively.

Full time equivalent employees at June 30, 2020 were 195 compared to 191 a year ago, and the same as March 31, 2020. The Bank has 30 relationship managers in seven offices.

Balance Sheet

Total assets increased $893 million, or 37% from year-end December 31, 2019 to $3.3 billion, with 76% of the increase attributable to PPP originations during the recent quarter. Total loans, excluding PPP loans, decreased $32 million, or 2%, to $1.46 billion from year-end as the Bank primarily focused its resources to participate in the PPP program and C&I line utilization declined. As of June 30, 2020 and March 31, 2020, the utilization rates for the Bank's commercial lines of credit were 27% and 35%, respectively.

During the first six months of 2020, total deposits grew by $860 million with a majority of the increase attributable to the proceeds of PPP loans. In addition, existing customers became more liquid as the economy slowed and receivables were converted to cash as well as new relationships to the Bank contributed to the significant growth in deposits during the first half of 2020. At June 30, 2020, the tangible common equity ratio was 6.89%; excluding PPP loans, the tangible common equity ratio was 8.67%.

Asset Quality

During the second quarter of 2020, non-performing assets declined from $4.5 million on March 31, 2020 to $2.8 million on June 30, 2020, representing 0.11% of total assets (excluding PPP loans). The Bank continues to have no Other Real Estate Owned (OREO). At June 30, 2020, the Bank's level of past due, criticized and classified loans represented 0.26%, 6.55% and 1.22% of total loans (excluding PPP loans), respectively. As of June 30, 2020 the Bank has one $2.6 million commercial loan on non-accrual status with a specific allowance. There are four other relationships that are impaired totaling $1.6 million with a specific allowance. At the end of the quarter, the allowance for loan losses stood at $22.4 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 six months of 2020, the Bank recorded a total of $538,000 in net charge-offs on two commercial loans, representing annualized net charge offs of 0.06%.

In response to the COVID-19 pandemic, the Bank established a loan payment deferment program to assist its customers who are experiencing short-term, temporary financial or operational problems. During the second quarter of 2020, loan payment deferrals were granted on 38 loans with a total principal balance of $94 million, or 4% of total loans; 68% of the deferrals granted were in the owner occupied and 24% were in non-owner occupied commercial real estate loans. Those loans were originally underwritten with a 53% average loan to value ratio. All payment deferrals granted to-date meet applicable requirements to continue accruing interest.

At June 30, 2020, loans to customers in the hotel, restaurant, entertainment, and recreation industries represented 5% of the loan portfolio. Retail and hospitality related loans, collateralized by commercial real estate, comprised 7% of the loan portfolio that was originally underwritten with a 55% average loan to value ratio. The Bank has no exposure to the oil and gas industry.

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) June March December June

2020 2020 2019 2019

Assets: Cash and Due from Banks $ 68,072 $ 36,539 $ 31,673 $ 66,605

Interest Earning Deposits in 232,770 149,654 45,202 10,313 Other Financial Institutions Investment Securities: US Agencies 240,012 265,758 284,032 376,573

Mortgage Backed Securities 313,119 286,122 292,126 194,735

State and Municipals 133,128 75,240 78,520 72,117

US Treasuries 10,081 10,116 10,009 9,991

Corporate Bonds 19,502 20,068 19,805 7,919

Securities 715,842 657,304 684,492 661,335 Available-for-Sale, at Fair Value State and Municipals Securities 86,289 86,499 86,707 87,121 Held-to-Maturity, at Amortized Cost Federal Home Loan Bank 10,864 10,356 10,356 10,356 Stock, at Cost Total Investment 812,995 754,159 781,555 758,812 Securities Loans Receivable: Commercial Real Estate 1,007,655 1,009,731 982,070 893,866

Commercial and Industrial 370,786 454,838 423,868 365,834

SBA Payroll Protection 675,666 - - - Program Residential Real Estate 71,112 76,083 76,481 61,116

Installment and Other 6,039 5,337 4,959 4,026

Total Loans 2,131,258 1,545,989 1,487,378 1,324,842 Receivable Allowance for (22,399 ) (21,888 ) (20,824 ) (18,548 ) Loan Losses Loans Receivable, 2,108,859 1,524,101 1,466,554 1,306,294 Net Furniture, Equipment and 8,520 8,833 9,023 6,453 Leasehold Improvements, Net Bank/Corporate Owned Life 26,651 25,698 26,448 25,975 Insurance Other Assets 37,396 38,650 41,456 47,030

Total Assets $ 3,295,263 $ 2,537,634 $ 2,401,911 $ 2,221,482

Liabilities: Non-Interest Bearing Demand $ 1,684,662 $ 1,164,965 $ 1,083,705 $ 988,259 Deposits Interest Bearing 204,133 214,967 215,730 202,465 Transaction Accounts Money Market and Savings 1,100,191 872,908 827,713 749,979 Deposits Certificates of Deposit 35,713 36,044 37,712 59,524

Total Deposits 3,024,699 2,288,884 2,164,860 2,000,227

Federal Home Loan Bank - - - - Advances / Other Borrowings Other Liabilities 43,206 33,526 30,386 29,190

Total Liabilities $ 3,067,905 $ 2,322,410 $ 2,195,246 $ 2,029,417

Shareholders'Equity: Common Stock $ 165,032 $ 164,456 $ 163,872 $ 162,589

Retained Earnings 58,359 51,624 46,784 35,378

Accumulated Other 3,967 (856 ) (3,991 ) (5,902 ) Comprehensive Income / (Loss) Total Shareholders' Equity $ 227,358 $ 215,224 $ 206,665 $ 192,065

Total Liabilities and $ 3,295,263 $ 2,537,634 $ 2,401,911 $ 2,221,482 Shareholders' Equity Standby Letters of Credit $ 37,259 $ 38,614 $ 39,513 $ 40,346

Per Share Information: Common Shares Outstanding 7,904,105 7,870,120 7,850,171 7,794,212

Book Value Per Share $ 28.76 $ 27.35 $ 26.33 $ 24.64

Tangible Book Value Per $ 28.76 $ 27.35 $ 26.33 $ 24.64 Share

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

2020 2020 2019

Interest Income: Interest and Fees on Loans $ 19,169 $ 17,295 $ 15,845

Interest on Investment 3,084 3,913 4,145 Securities Interest on Interest Earning Deposits in Other Financial 93 54 263 Institutions Total Interest Income 22,346 21,262 20,253

Interest Expense: Interest on Interest Bearing 37 105 107 Transaction Accounts Interest on Money Market and 538 968 956 Savings Deposits Interest on Certificates of 28 41 116 Deposits Interest on Federal Home Loan Bank Advances and Other Borrowings - 131 14

Total Interest Expense 603 1,245 1,193

Net Interest Income 21,743 20,017 19,060

Provision for Loan Losses 680 1,434 928

Net Interest Income after 21,063 18,583 18,132 Provision for Loan Losses Non-Interest Income: Deposit Fees 640 615 543

International Fees 244 282 254

Gain (Loss) on Sale of (184 ) 47 (145 ) Investment Securities, Net Gain on Sale of SBA Loans, Net - 19 161

Bank/Corporate Owned Life 953 (750 ) 200 Insurance Income (Expense) Other 143 198 329

Total Non-Interest Income 1,796 411 1,342

Non-Interest Expense: Salaries and Employee Benefits 9,384 8,219 8,574

Occupancy and Equipment 953 920 1,047

Professional Services 1,627 1,482 1,196

Promotion Expenses 267 366 322

Other 1,693 1,058 1,160

Total Non-Interest Expense 13,924 12,045 12,299

Earnings before income taxes 8,935 6,949 7,175

Income Tax Expense 2,200 2,110 1,906

NET INCOME $ 6,735 $ 4,839 $ 5,269

Add back: After-Tax Gain (Loss) on Sale of $ 139 $ (33 ) $ 107 Investment Securities, Net After-Tax DCP ABB Stock Expense $ - $ - $ 52 (Benefit)Core Net Income $ 6,874 $ 4,806 $ 5,428

Per Share Information: Earnings Per Share - Basic $ 0.84 $ 0.60 $ 0.66

Earnings Per Share - Diluted $ 0.83 $ 0.60 $ 0.65

Core Earnings Per Share - $ 0.85 $ 0.59 $ 0.67 Diluted Weighted Average Shares - 8,046,122 8,036,255 7,947,731 Basic Weighted Average Shares - 8,097,354 8,122,355 8,079,466 Diluted

American Business BankFigures in $000, except share and per shareamounts INCOME STATEMENTS (unaudited) For the six months ended: June June

2020 2019

Interest Income: Interest and Fees on Loans $ 36,464 $ 30,922

Interest on Investment Securities 6,997 8,419

Interest on Interest Earning Deposits in Other Financial 147 766 Institutions Total 43,608 40,107 Interest Income Interest Expense: Interest on Interest Bearing Transaction 141 210 Accounts Interest on Money Market and Savings Deposits 1,505 1,763

Interest on Certificates of Deposits 69 221

Interest on Federal Home Loan Bank Advances and Other 131 14 Borrowings Total 1,846 2,208 Interest Expense Net Interest Income 41,762 37,899

Provision for Loan Losses 2,114 1,018

Net Interest Income after Provision for Loan 39,648 36,881 Losses Non-Interest Income: Deposit Fees 1,255 1,045

International Fees 527 513

Gain (Loss) on Sale of Investment Securities, (137 ) (145 ) Net Gain on Sale of SBA Loans, Net 19 239

Bank/Corporate Owned Life Insurance Income 203 647 (Expense) Other 341 514

Total Non-Interest Income 2,208 2,813

Non-Interest Expense: Salaries and Employee Benefits 17,603 18,017

Occupancy and Equipment 1,873 2,068

Professional Services 3,109 2,394

Promotion Expenses 633 586

Other 2,754 2,253

Total Non-Interest Expense 25,972 25,318

Earnings before income taxes 15,884 14,376

Income Tax Expense 4,310 3,706

NET INCOME $ 11,574 $ 10,670

Add back: After-Tax Net Gains (Losses) on Sale of $ 100 $ 108 Investment Securities After-Tax DCP ABB Stock Expense (Benefit) $ - $ 451

Core Net Income $ 11,674 $ 11,229

Per Share Information: Earnings Per Share - Basic $ 1.44 $ 1.35

Earnings Per Share - Diluted $ 1.43 $ 1.32

Core Earnings Per Share - Diluted $ 1.44 $ 1.39

Weighted Average Shares - Basic 8,041,189 7,923,375

Weighted Average Shares - Diluted 8,109,855 8,068,298

American BusinessBankFigures in $000 QUARTERLY AVERAGE BALANCE SHEETS ANDYIELD ANALYSIS (unaudited) For the three months ended: June 2020 March 2020 Average Interest Average Average Interest Average Balance Inc/Exp Yield/ Balance Inc/Exp Yield/ Rate RateInterest EarningAssets: Interest Earning Deposits in Other $ 264,722 $ 93 0.14 % $ 27,556 $ 54 0.80 % Financial Institutions Investment Securities: US Agencies 260,033 270 0.41 % 277,854 677 0.98 %

Mortgage Backed 271,173 1,434 2.12 % 287,295 1,742 2.43 % Securities State and 178,378 1,196 2.68 % 166,727 1,121 2.69 % Municipals US Treasuries 10,018 37 1.48 % 10,025 37 1.48 %

Corporate Bonds 19,908 147 2.95 % 19,947 150 3.00 %

Securities Available-for-Sale 739,510 3,084 1.67 % 761,848 3,727 1.96 % and Held-to-Maturity Federal Home Loan 10,753 - 0.00 % 10,356 186 7.16 % Bank Stock Total Investment 750,263 3,084 1.64 % 772,204 3,913 2.03 % Securities Loans Receivable: Commercial Real 1,003,318 11,031 4.42 % 1,005,413 11,345 4.54 % Estate Commercial and 402,179 4,380 4.38 % 436,183 5,024 4.63 % Industrial SBA Payroll 539,535 2,994 2.23 % - - 0.00 % Protection Program Residential Real 70,984 705 4.00 % 76,302 886 4.67 % Estate Installment and 5,037 59 4.75 % 5,649 40 2.88 % Other Total Loans 2,021,053 19,169 3.81 % 1,523,547 17,295 4.57 % Receivable Total Interest $ 3,036,038 $ 22,346 2.91 % $ 2,323,307 $ 21,262 3.62 % Earning Assets Liabilities: Non-Interest 1,624,250 - 0.00 % 1,104,594 - 0.00 % Bearing Demand Deposits Interest Bearing 201,439 37 0.07 % 202,250 105 0.21 % Transaction Accounts Money Market and 1,027,292 538 0.21 % 807,134 968 0.48 % Savings Deposits Certificates of 35,614 28 0.31 % 36,427 41 0.46 % Deposit Total Deposits 2,888,595 603 0.08 % 2,150,405 1,114 0.21 %

Federal Home Loan Bank - - 0.00 % 31,714 131 1.66 % Advances / Other Borrowings Total Interest 1,264,345 603 0.19 % 1,077,525 1,245 0.46 % Bearing Deposits and Borrowings Total Deposits and $ 2,888,595 $ 603 0.08 % $ 2,182,119 $ 1,245 0.23 % Borrowings Net Interest $ 21,743 $ 20,017 Income Net Interest Rate 2.83 % 3.39 % Spread Net Interest 2.88 % 3.47 % Margin Net Interest 3.02 % 3.47 % Margin, excluding SBA PPP

American BusinessBankFigures in $000 QUARTERLY AVERAGE BALANCE SHEETS ANDYIELD ANALYSIS (unaudited) For the three months ended: June 2020 June 2019 Average Interest Average Average Interest Average Balance Inc/Exp Yield/ Balance Inc/Exp Yield/ Rate RateInterest EarningAssets: Interest Earning Deposits in Other $ 264,722 $ 93 0.14 % $ 43,368 $ 263 2.46 % Financial Institutions Investment Securities: US Agencies 260,033 270 0.41 % 402,437 1,449 1.44 %

Mortgage Backed 271,173 1,434 2.12 % 191,710 1,362 2.84 % Securities State and 178,378 1,196 2.68 % 163,565 1,096 2.68 % Municipals US Treasuries 10,018 37 1.48 % 10,046 37 1.49 %

Corporate Bonds 19,908 147 2.95 % 2,720 24 3.46 %

Securities Available-for-Sale 739,510 3,084 1.67 % 770,478 3,968 2.06 % and Held-to-Maturity Federal Home Loan 10,753 - 0.00 % 10,356 177 6.84 % Bank Stock Total Investment 750,263 3,084 1.64 % 780,834 4,145 2.12 % Securities Loans Receivable: Commercial Real 1,003,318 11,031 4.42 % 870,023 10,289 4.74 % Estate Commercial and 402,179 4,380 4.38 % 359,009 4,712 5.26 % Industrial SBA Payroll 539,535 2,994 2.23 % - - 0.00 % Protection Program Residential Real 70,984 705 4.00 % 60,345 808 5.37 % Estate Installment and 5,037 59 4.75 % 4,996 36 2.88 % Other Total Loans 2,021,053 19,169 3.81 % 1,294,373 15,845 4.91 % Receivable Total Interest $ 3,036,038 $ 22,346 2.91 % $ 2,118,575 $ 20,253 3.78 % Earning Assets Liabilities: Non-Interest 1,624,250 - 0.00 % 1,006,872 - 0.00 % Bearing Demand Deposits Interest Bearing 201,439 37 0.07 % 198,638 107 0.22 % Transaction Accounts Money Market and 1,027,292 538 0.21 % 723,827 956 0.53 % Savings Deposits Certificates of 35,614 28 0.31 % 69,674 116 0.67 % Deposit Total Deposits 2,888,595 603 0.08 % 1,999,011 1,179 0.24 %

Federal Home Loan Bank - - 0.00 % 2,049 14 2.66 % Advances / Other Borrowings Total Interest 1,264,345 603 0.19 % 994,188 1,193 0.48 % Bearing Deposits and Borrowings Total Deposits and $ 2,888,595 $ 603 0.08 % $ 2,001,060 $ 1,193 0.24 % Borrowings Net Interest $ 21,743 $ 19,060 Income Net Interest Rate 2.83 % 3.54 % Spread Net Interest 2.88 % 3.61 % Margin Net Interest 3.02 % 3.61 % Margin, excluding SBA PPP

American BusinessBankFigures in $000 YEAR-TO-DATE AVERAGE BALANCE SHEETS ANDYIELD ANALYSIS (unaudited) For the six months ended: June 2020 June 2019 Average Interest Average Average Interest Average Balance Inc/Exp Yield/ Balance Inc/Exp Yield/ Rate RateInterest EarningAssets: Interest Earning Deposits with Other $ 146,139 $ 147 0.20 % $ 62,591 $ 766 2.48 % Financial Institutions Investment Securities: US Agencies 268,943 946 0.70 % 418,032 3,206 1.53 %

Mortgage Backed 279,234 3,177 2.28 % 170,005 2,481 2.92 % Securities State and 172,553 2,317 2.69 % 167,964 2,257 2.69 % Municipals US Treasuries 10,022 74 1.48 % 10,049 74 1.48 %

Corporate Bonds 19,928 297 2.98 % 2,362 42 3.53 %

Securities Available-for-Sale 750,680 6,811 1.81 % 768,412 8,060 2.10 % and Held-to-Maturity Federal Home Loan 10,554 186 3.52 % 10,356 359 6.94 % Bank Stock Total Investment 761,234 6,997 1.84 % 778,768 8,419 2.16 % Securities Loans Receivable: Commercial Real 1,004,366 22,374 4.48 % 850,748 19,944 4.73 % Estate Commercial and 419,181 9,404 4.51 % 356,349 9,311 5.27 % Industrial SBA Payroll 269,767 2,994 2.23 % - - 0.00 % Protection Program Residential Real 73,643 1,592 4.35 % 60,138 1,596 5.35 % Estate Installment and 5,343 100 3.76 % 4,841 71 2.95 % Other Total Loans 1,772,300 36,464 4.14 % 1,272,076 30,922 4.90 % Receivable Total Interest $ 2,679,673 $ 43,608 3.22 % $ 2,113,435 $ 40,107 3.77 % Earning Assets Liabilities: Non-Interest 1,364,422 - 0.00 % 1,001,486 - 0.00 % Bearing Demand Deposits Interest Bearing 201,845 141 0.14 % 198,723 210 0.21 % Transaction Accounts Money Market and 917,213 1,505 0.33 % 729,957 1,763 0.49 % Savings Deposits Certificates of 36,020 69 0.39 % 67,152 221 0.66 % Deposit Total Deposits 2,519,500 1,715 0.14 % 1,997,318 2,194 0.22 %

Federal Home Loan Bank 15,857 131 1.66 % 1,030 14 2.66 % Advances / Other Borrowings Total Interest 1,170,935 1,846 0.32 % 996,862 2,208 0.45 % Bearing Deposits and Borrowings Total Deposits and $ 2,535,357 $ 1,846 0.15 % $ 1,998,348 $ 2,208 0.22 % Borrowings Net Interest $ 41,762 $ 37,899 Income Net Interest Rate 3.07 % 3.55 % Spread Net Interest 3.13 % 3.62 % Margin Net Interest 3.23 % 3.62 % Margin, excluding SBA PPP

American Business BankFigures in $000 SUPPLEMENTAL DATA (unaudited) June March December June

2020 2020 2019 2019

Performance Ratios: Quarterly: Return on Average Assets 0.86 % 0.80 % 0.99 % 0.95 % (ROAA) Core Return on Average 0.87 % 0.79 % 0.99 % 0.98 % Assets (ROAA) Return on Average Equity 12.14 % 9.15 % 11.74 % 11.74 % (ROAE) Core Return on Average 12.39 % 9.09 % 11.74 % 12.09 % Equity (ROAE) Efficiency Ratio 58.70 % 59.10 % 58.77 % 59.86 %

Core Efficiency Ratio 58.70 % 59.10 % 58.77 % 59.51 %

Year-to-Date Return on Average Assets 0.83 % 0.80 % 0.97 % 0.97 % (ROAA) Core Return on Average 0.84 % 0.79 % 1.00 % 1.02 % Assets (ROAA) Return on Average Equity 10.68 % 9.15 % 11.80 % 12.29 % (ROAE) Core Return on Average 10.77 % 9.09 % 12.15 % 12.93 % Equity (ROAE) Efficiency Ratio 58.88 % 59.10 % 60.29 % 61.97 %

Core Efficiency Ratio 58.88 % 59.10 % 59.57 % 60.48 %

Capital Adequacy: Total Risk Based Capital 14.64 % 13.71 % 13.82 % 14.37 % Ratio Common Equity Tier 1 Capital 13.38 % 12.46 % 12.57 % 13.12 % Ratio Tier 1 Risk Based Capital 13.38 % 12.46 % 12.57 % 13.12 % Ratio Tier 1 Leverage Ratio 7.10 % 8.91 % 8.66 % 8.94 %

Tangible Common Equity / 6.89 % 8.48 % 8.60 % 8.65 % Tangible Assets Asset Quality Overview Non-Performing Loans $ 2,601 $ 4,225 $ 1,855 $ 1,047

Loans 90+ Days Past Due and - - - - Still Accruing Total 2,601 4,225 1,855 1,047 Non-Performing Loans Restructured Loans 223 225 227 231

Other Real Estate Owned - - - -

ALLL / Loans Receivable 1.05 % 1.42 % 1.40 % 1.40 %

Non-Performing Loans / Total 0.13 % 0.29 % 0.14 % 0.10 % Loans Receivable * Non-Performing Loans / Total 0.19 % 0.29 % 0.14 % 0.10 % Loans Receivable *, excluding PPP ** Non-Performing Assets / 0.09 % 0.18 % 0.09 % 0.06 % Total Assets * Non-Performing Assets / Total 0.11 % 0.18 % 0.09 % 0.06 % Assets *, excluding PPP ** Net Charge-Offs (Recoveries) $ 168 $ 370 $ (8 ) $ (12 ) quarterly Net Charge-Offs (Recoveries) $ 538 $ 370 $ (41 ) $ (27 ) year-to-date Net Charge-Offs (Recoveries) 0.03 % 0.02 % 0.00 % 0.00 % year-to-date / Average Loans Receivable * Includes non-accrual loans, accruing loans past due 90+ days and Troubled Debt Restructurings (TDRs). ** SBA Paycheck Protection Program (PPP)

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