AMERICAN BUSINESS BANK Announces Record Growth in Net Loans

Total Assets reach over $2 Billion

LOS ANGELES--()--AMERICAN BUSINESS BANK (OTCBB: AMBZ) today reported net income of $3.7 million for the quarter ended June 30, 2018, or $.48 per diluted share compared to net income of $2.4 million or $.31 per diluted share for the first quarter of 2018. The increase in net income was primarily due to an increase in net interest income in addition to an increase in the gain on sale of SBA loans with a reduction to normalized compensation expense.

Net interest income increased by $850 thousand or 6% to $15.8 million for the second quarter of 2018 compared to $15 million for the first quarter of 2018. This quarterly increase represents a 23% annualized growth rate in net interest income.

Total assets increased $148 million, or 16% annualized from year end December 31, 2017 to $2.0 billion. This was driven by an increase in deposits of $168 million, or 21% annualized growth from year end. Total loans increased $173 million to $1.1 billion, or 38% annualized growth from year end. This resulted in an increase in the loan to deposit ratio to 60% from 56% during the year. In the second quarter of 2018, the Bank grew loans by $94 million and deposits by $80 million. At June 30, 2018, non-interest bearing deposits represented 50% of total deposits.

“This double digit growth again surpassed our expectations. Although the investment we have made in hiring seasoned banking personnel has been a drag on earnings in the first half of the year, the shift to higher earning assets coupled with core deposit growth places the Bank in the right direction for the future,” said Leon Blankstein, ABB’s President, CEO and Director.

From a year ago, total assets increased $244 million or 14%, from June 30, 2017. This was driven by an increase in deposits of $214 million, or 13% over the twelve months. Total loans increased $209 million, or 24% from a year ago. This resulted in an increase in the loan to deposit ratio to 60% from 55% a year ago.

Asset quality at June 30, 2018 remains excellent with non-performing assets to total assets of 0.10%, $2.1 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 $15.4 million, or 1.41% of total loans. For 2018 year to date, the Bank had a recovery of $30,000.

“We are pleased with the quality of the new loan production as well as the even blend of C&I and real estate loans. As always, we are committed to growing with prudent underwriting as we have done since the beginning of the Bank twenty years ago. With the opportunities in our market place, the Bank prefers to focus its earning assets on organic loan growth over increasing the investment portfolio,” said Patti Vollmer, Executive Vice President and Chief Credit Officer.

Net Interest Income increased due to an increase in average outstanding loans, a higher yield on loans and a low deposit beta for the current quarter over the prior quarter. The yield on average loans increased to 4.55% for the second quarter of 2018 compared to 4.46% for the first quarter of 2018. The new loan production weighted average coupon was 4.88% in the quarter. The Bank’s core deposits continue to be a strength with the cost of deposits at 14 bps for the most recent quarter. Thus, net interest margin in the second quarter increased to 3.35% compared to 3.28% in the first quarter.

Non-Interest Income increased $567,000 quarter over quarter primarily as the Bank recorded a gain on sale of SBA loans of $491,000 generated by the new SBA group.

Non-Interest Expense decreased $537,000 for the quarter ending June 30, 2018 compared to the prior quarter. The first quarter included a one-time charge of $979,000 in compensation and benefits.

Year to date net income is below last year due to the significant investment in a growth strategy. Full time equivalent employees at June 30, 2018 were 184, an increase of 42 employees or 30% higher than a year ago.

As announced in May, the Bank expanded into North Orange County with a new loan production office. “North Orange County has always been an important market for American Business Bank, and we look forward to further penetrating this business rich environment. We hired an impressive team of bankers for this office and are confident that they will meet the needs of businesses in the area,” said David Wolf, Executive Vice President.

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
       
BALANCE SHEET (unaudited)
 
 
 
June March December June
2018   2018   2017   2017

Assets:

Cash and Due from Banks $ 54,916 $ 44,171 $ 32,205 $ 47,915
Interest Earning Deposits with Other Financial Institutions 41,709 2,705 9,701 12,706
 

Investment Securities:

US Agencies 504,722 551,783 584,950 517,498
Mortgage Backed Securities 86,795 88,362 86,909 73,187
State & Municipals 166,504 177,305 169,803 183,213
US Treasuries 9,791 9,822 9,931 -
Corporate Bonds     1,995       1,994       3,394       6,488  
Securities Available-for-Sale, at Fair Value 769,807 829,266 854,987 780,386
Federal Home Loan Bank Stock, at Cost     10,611       10,193       10,190       10,190  
Total Investment Securities 780,418 839,459 865,177 790,576

Gross Loans:

Commercial Real Estate 733,183 671,478 641,459 597,035
Commercial & Industrial 295,127 256,068 216,007 225,827
Residential Real Estate 61,807 68,956 59,665 58,457
Installment and Other     3,418       3,042       3,262       3,455  
Total Gross Loans 1,093,535 999,544 920,393 884,774
Allowance for Loan & Lease Losses     (15,431 )     (14,487 )     (13,639 )     (13,324 )
Net Loans 1,078,104 985,057 906,754 871,450
Premises & Equipment 1,816 1,551 1,273 1,464
Other Assets     64,289       59,995       58,439       53,511  
Total Assets   $ 2,021,252     $ 1,932,938     $ 1,873,549     $ 1,777,622  
 

Liabilities:

Non-Interest Bearing Demand Deposits $ 905,552 $ 876,164 $ 863,410 $ 829,775
Interest Bearing Transaction Accounts 203,068 179,876 170,326 185,063
Money Market and Savings Deposits 632,257 613,881 563,611 536,790
Certificates of Deposit     67,032       57,544       42,390       42,690  
Total Deposits 1,807,909 1,727,465 1,639,737 1,594,318
Federal Home Loan Bank Advances / Other Borrowings 37,000 32,000 62,000 18,000
Other Liabilities     21,686       20,336       19,009       13,059  
Total Liabilities   $ 1,866,595     $ 1,779,801     $ 1,720,746     $ 1,625,377  
 

Shareholders' Equity:

Common Stock & Retained Earnings $ 170,673 $ 165,750 $ 160,880 $ 157,691
Accumulated Other Comprehensive Income / (Loss)     (16,016 )     (12,613 )     (8,077 )     (5,446 )
Total Shareholders' Equity   $ 154,657     $ 153,137     $ 152,803     $ 152,245  
Total Liabilities & Shareholders' Equity   $ 2,021,252     $ 1,932,938     $ 1,873,549     $ 1,777,622  
 
Standby Letters of Credit $ 30,449 $ 29,220 $ 28,863 $ 28,777
 

Capital Adequacy:

Tangible Common Equity / Tangible Assets 7.65 % 7.92 % 8.16 % 8.56 %
Common Equity Tier 1 Ratio 14.12 % 14.84 % 15.26 % 14.80 %
Tier 1 Capital Ratio 14.12 % 14.84 % 15.26 % 14.80 %
Total Capital Ratio 15.37 % 16.09 % 16.51 % 16.05 %
Tier 1 Leverage Ratio 8.66 % 8.55 % 8.55 % 8.02 %
 

Per Share Information:

Common Shares Outstanding 7,662,837 7,588,400 7,539,922 7,515,680
Book Value Per Share $ 20.18 $ 20.18 $ 20.27 $ 20.23
Tangible Book Value Per Share $ 20.18 $ 20.18 $ 20.27 $ 20.23
 
American Business Bank
Figures in $000, except per share amounts
     
INCOME STATEMENT (unaudited)
 
 
For the three months ended:
June March June
2018   2018   2017

Interest Income:

Loans $ 11,846 $ 10,612 $ 9,236
Investment Securities 4,652 4,983 4,458
Interest Earning Deposits in Other Financial Institutions     93       45       125  
Total Interest Income 16,591 15,640 13,819
 
 

Interest Expense:

Money Market and Savings Deposits 531 407 268
Certificates of Deposits 77 62 35
Federal Home Loan Bank Advances and Other     141       175       96  
Total Interest Expense 749 644 399
 
 
Net Interest Income 15,842 14,996 13,420
Provision for Loan Losses     (931 )     (832 )     (150 )
Net Interest Income after Provision for Loan Losses 14,911 14,164 13,270
 
 

Non-Interest Income:

Deposit Fees 474 424 415
International Fees 220 194 186
Realized Securities Gains (Losses) (149 ) (195 ) (87 )
Gains (Losses) on Sale of SBA Loans 491 105 -
Other     466       407       400  
Total Non-Interest Income 1,502 935 914
 
 

Non-Interest Expense:

Compensation & Benefits 7,962 8,793 6,002
Occupancy & Equipment 853 734 702
Professional Services 1,207 1,139 972
Promotion Expenses 321 271 393
Other     1,234       1,177       1,335  
Total Non-Interest Expense 11,577 12,114 9,404
 
 
Earnings before income taxes 4,836 2,985 4,780
Provision for Income Tax     (1,106 )     (559 )     (1,266 )
 
 
NET INCOME   $ 3,730     $ 2,426     $ 3,514  
 
After-Tax Realized Securities (Gains) / Losses $ 115 $ 159 $ 64
After-Tax Cash Value - DCP ABB stocks (Gains) / Losses $ 50 $ 81 $ 1,026
Core Net Income   $ 3,895     $ 2,666     $ 4,604  
 
Per Share Information:
Earnings Per Share - Basic $ 0.49 $ 0.32 $ 0.47
 
Earnings Per Share - Diluted $ 0.48 $ 0.31 $ 0.45
 
Core Earnings Per Share - Diluted $ 0.50 $ 0.34 $ 0.59
 
Weighted Average Shares - Basic 7,616,766 7,569,277 7,515,680
 
Weighted Average Shares - Diluted 7,847,871 7,830,162 7,756,363
 
American Business Bank
Figures in $000, except per share amounts
   
INCOME STATEMENT (unaudited)
 
 
For the six months ended:
June June
2018   2017

Interest Income:

Loans $ 22,458 $ 17,628
Investment Securities 9,635 10,101
Interest Earning Deposits in Other Financial Institutions     138       161  
Total Interest Income 32,231 27,890
 
 

Interest Expense:

Money Market and Savings Deposits 940 540
Certificates of Deposits 138 70
Federal Home Loan Bank Advances and Other     315       304  
Total Interest Expense 1,393 914
 
 
Net Interest Income 30,838 26,976
Provision for Loan Losses     (1,763 )     (328 )
Net Interest Income after Provision for Loan Losses 29,075 26,648
 
 

Non-Interest Income:

Deposit Fees 898 819
International Fees 414 374
Realized Securities Gains (Losses) (345 ) (47 )
Gains (Losses) on Sale of SBA Loans 596 -
Other     873       814  
Total Non-Interest Income 2,436 1,960
 
 

Non-Interest Expense:

Compensation & Benefits 16,755 12,863
Occupancy & Equipment 1,586 1,314
Professional Services 2,346 1,736
Promotion Expenses 592 648
Other     2,410       2,694  
Total Non-Interest Expense 23,689 19,255
 
 
Earnings before income taxes 7,822 9,353
Provision for Income Tax     (1,665 )     (2,283 )
 
 
NET INCOME   $ 6,157     $ 7,070  
 
After-Tax Realized Securities (Gains) / Losses $ 271 $ 36
After-Tax Cash Value - DCP ABB stocks (Gains) / Losses $ 51 $ 1,055
Tax Reform Act Deferred Tax Asset Writeoff $ - $ -
Core Net Income   $ 6,479     $ 8,161  
 

Per Share Information:

Earnings Per Share - Basic $ 0.81 $ 0.94
 
Earnings Per Share - Diluted $ 0.79 $ 0.91
 
Core Earnings Per Share - Diluted $ 0.83 $ 1.05
 
Weighted Average Shares - Basic 7,593,022 7,515,680
 
Weighted Average Shares - Diluted 7,838,821 7,756,363
 
American Business Bank
Figures in $000, except per share amounts
   
 
     
June June
2018   2017
 

Performance Ratios:

Return on Average Assets (ROAA) 0.63 % 0.77 %
Return on Average Equity (ROAE) 8.09 % 9.97 %
 
Core Return on Average Assets (ROAA) 0.67 % 0.89 %
Core Return on Average Equity (ROAE) 8.52 % 11.51 %
 
 

Asset Quality Overview:

Non-Performing Loans $ 2,115 $ 933
Loans 90+Days Past Due and Still Accruing     -       -  
Total Non-Performing Loans $ 2,115 $ 933
 

Restructured Loans (TDRs)

$ 239 $ 247
 
Other Real Estate Owned - -
 
ALLL / Gross Loans 1.41 % 1.51 %
Non-Performing Loans / Total Loans * 0.19 % 0.11 %
Non-Performing Assets / Total Assets * 0.10 % 0.05 %
Net Charge-Offs (Recoveries) $ (30 ) $ (31 )
Net Charge-Offs (Recoveries) / Average Gross Loans (0.00 %) (0.00 %)
 

* Excludes Restructured Loans

 
American Business Bank
Figures in $000
           
QUARTERLY AVERAGE BALANCE SHEETS AND YIELD ANALYSIS (unaudited)
 
 
For the three months ended:  
June 2018 March 2018
Average Interest Average Average Interest Average
Balance   Inc/Exp   Yield/Rate Balance   Inc/Exp   Yield/Rate

Interest Earning Assets:

Interest Earning Deposits with Other Financial Institutions $ 21,686 $ 93 1.74% $ 11,658 $ 45 1.55%
 

Investment Securities:

US Agencies 528,777 2,180 1.65% 580,066 2,580 1.78%
Mortgage Backed Securities 92,146 627 2.72% 91,726 587 2.56%
State & Municipals 187,246 1,621 3.46% 181,741 1,580 3.48%
US Treasuries 10,073 37 1.49% 10,079 37 1.48%
Corporate Bonds     2,000     16   3.12%   2,353     16   2.76%
Securities Available-for-Sale 820,242 4,481 2.16% 865,965 4,801 2.22%
Federal Home Loan Bank Stock     10,524     171   6.50%   10,192     183   7.16%
Total Investment Securities 830,766 4,652 2.22% 876,157 4,983 2.27%

Gross Loans:

Commercial Real Estate 698,804 7,801 4.48% 659,296 7,193 4.42%
Commercial & Industrial 275,934 3,156 4.59% 238,393 2,592 4.41%
Residential Real Estate 66,101 811 4.92% 64,624 757 4.75%
Installment and Other     3,719     78   8.36%   3,389     70   8.39%
Total Gross Loans     1,044,558     11,846   4.55%   965,702     10,612   4.46%
Total Interest Earning Assets   $ 1,897,010   $ 16,591   3.46% $ 1,853,517   $ 15,640   3.38%
 

Liabilities:

Non-Interest Bearing Demand Deposits 895,336 - 0.00% 881,512 - 0.00%
Interest Bearing Transaction Accounts 180,292 76 0.17% 173,091 74 0.17%
Money Market and Savings Deposits 629,622 455 0.29% 593,198 333 0.23%
Certificates of Deposit     62,415     77   0.49%   56,548     62   0.44%
Total Deposits 1,767,664 608 0.14% 1,704,350 469 0.11%
Federal Home Loan Bank Advances / Other Borrowings     30,648     141   1.84%   46,850     175   1.51%
Total Interest Deposits & Borrowings     902,977     749   0.33%   869,688     644   0.30%
Total Deposits & Borrowings   $ 1,798,312   $ 749   0.17% $ 1,751,200   $ 644   0.15%
 
Net Interest Income $ 15,842 $ 14,996
Net Interest Rate Spread 3.29% 3.23%
Net Interest Margin 3.35% 3.28%
 
American Business Bank
Figures in $000
           
QUARTERLY AVERAGE BALANCE SHEETS AND YIELD ANALYSIS (unaudited)
 
 
For the three months ended:  
June 2018 June 2017
Average Interest Average Average Interest Average
Balance   Inc/Exp   Yield/Rate Balance   Inc/Exp   Yield/Rate

Interest Earning Assets:

Interest Earning Deposits with Other Financial Institutions $ 21,686 $ 93 1.74% $ 28,432 $ 125 1.78%
 

Investment Securities:

US Agencies 528,777 2,180 1.65% 524,796 1,876 1.43%
Mortgage Backed Securities 92,146 627 2.72% 76,923 326 1.70%
State & Municipals 187,246 1,621 3.46% 224,179 2,097 3.74%
US Treasuries 10,073 37 1.49% - - 0.00%
Corporate Bonds     2,000     16   3.12%   6,501     45   2.79%
Securities Available-for-Sale 820,242 4,481 2.16% 832,400 4,344 2.06%
Federal Home Loan Bank Stock     10,524     171   6.50%   10,002     114   4.56%
Total Investment Securities 830,766 4,652 2.22% 842,402 4,458 2.09%

Gross Loans:

Commercial Real Estate 698,804 7,801 4.48% 581,539 6,309 4.35%
Commercial & Industrial 275,934 3,156 4.59% 216,100 2,270 4.21%
Residential Real Estate 66,101 811 4.92% 54,343 622 4.59%
Installment and Other     3,719     78   8.36%   3,882     35   3.56%
Total Gross Loans     1,044,558     11,846   4.55%   855,864     9,236   4.33%
Total Interest Earning Assets   $ 1,897,010   $ 16,591   3.46% $ 1,726,698   $ 13,819   3.17%
 

Liabilities:

Non-Interest Bearing Demand Deposits 895,336 - 0.00% 860,856 - 0.00%
Interest Bearing Transaction Accounts 180,292 76 0.17% 169,522 64 0.15%
Money Market and Savings Deposits 629,622 455 0.29% 537,711 204 0.15%
Certificates of Deposit     62,415     77   0.49%   39,390     35   0.35%
Total Deposits 1,767,664 608 0.14% 1,607,479 303 0.08%
Federal Home Loan Bank Advances / Other Borrowings     30,648     141   1.84%   42,467     96   0.91%
Total Interest Deposits & Borrowings     902,977     749   0.33%   789,090     399   0.20%
Total Deposits & Borrowings   $ 1,798,312   $ 749   0.17% $ 1,649,946   $ 399   0.10%
 
Net Interest Income $ 15,842 $ 13,420
Net Interest Rate Spread 3.29% 3.07%
Net Interest Margin 3.35% 3.12%
 
American Business Bank
Figures in $000
           
YEAR-TO-DATE AVERAGE BALANCE SHEETS AND YIELD ANALYSIS (unaudited)
 
 
For the six months ended:  
June 2018 June 2017
Average Interest Average Average Interest Average
Balance   Inc/Exp   Yield/Rate Balance   Inc/Exp   Yield/Rate

Interest Earning Assets:

Interest Earning Deposits with Other Financial Institutions $ 16,700 $ 138 1.67% $ 15,011 $ 161 2.17%
 

Investment Securities:

US Agencies 554,279 4,761 1.72% 565,595 4,253 1.50%
Mortgage Backed Securities 91,937 1,214 2.64% 77,789 750 1.93%
State & Municipals 184,509 3,201 3.47% 248,836 4,683 3.76%
US Treasuries 10,076 74 1.48% - - 0.00%
Corporate Bonds     2,176     32   2.93%     6,501     89   2.75%
Securities Available-for-Sale 842,977 9,282 2.19% 898,721 9,775 2.16%
Federal Home Loan Bank Stock     10,359     353   6.82%     9,725     327   6.71%
Total Investment Securities 853,336 9,635 2.25% 908,447 10,101 2.21%

Gross Loans:

Commercial Real Estate 679,159 14,994 4.45% 571,834 12,236 4.32%
Commercial & Industrial 257,267 5,748 4.51% 207,677 4,254 4.13%
Residential Real Estate 65,367 1,568 4.84% 48,106 1,063 4.45%
Installment and Other     3,555     148   8.37%     3,927     75   3.86%
Total Gross Loans     1,005,348     22,458   4.50%     831,544     17,628   4.27%
Total Interest Earning Assets   $ 1,875,384   $ 32,231   3.42%   $ 1,755,002   $ 27,890   3.16%
 

Liabilities:

Non-Interest Bearing Demand Deposits 888,462 - 0.00% 844,899 - 0.00%
Interest Bearing Transaction Accounts 176,711 151 0.17% 170,529 124 0.15%
Money Market and Savings Deposits 611,511 789 0.26% 547,970 416 0.15%
Certificates of Deposit     59,498     138   0.47%     40,048     70   0.35%
Total Deposits 1,736,182 1,078 0.13% 1,603,446 610 0.08%
Federal Home Loan Bank Advances / Other Borrowings     38,704     315   1.64%     80,343     304   0.76%
Total Interest Deposits & Borrowings     886,424     1,393   0.32%     838,890     914   0.22%
Total Deposits & Borrowings   $ 1,774,886   $ 1,393   0.16%   $ 1,683,788   $ 914   0.11%
 
Net Interest Income $ 30,838 $ 26,976
Net Interest Rate Spread 3.26% 3.05%
Net Interest Margin 3.32% 3.10%

Contacts

AMERICAN BUSINESS BANK
Karen Schoenbaum
EVP/CFO
(213) 430-4000

Contacts

AMERICAN BUSINESS BANK
Karen Schoenbaum
EVP/CFO
(213) 430-4000