LOS ANGELES--(BUSINESS WIRE)--AMERICAN BUSINESS BANK (OTCBB: 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: |
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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: |
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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: |
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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: |
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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: |
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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: |
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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: |
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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 |
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CONSOLIDATED INCOME STATEMENT (unaudited) | ||||||||||||||||||||
For the 12-month period ended: |
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December | December | Change | ||||||||||||||||||
2017 | 2016 | % | ||||||||||||||||||
Interest Income: |
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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: |
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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: |
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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: |
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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 |
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$ | 11,591 | 22.5 | % | |||||||||||||
Per Share Information: |
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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 |
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December | December | Change | ||||||||||||||||
2017 | 2016 | % | ||||||||||||||||
Performance Ratios |
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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 |
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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 |