AMBZ American Business Bank (QX)

AMERICAN BUSINESS BANK (Bank) (OTCBB: AMBZ) today reported net income of $2,914,000 for the third quarter of 2014. Earnings per share (basic) in the third quarter of 2014 were $0.59 versus $0.63 in the third quarter of 2013. The Bank’s “core” earnings per share were $0.54 in the third quarter of 2014 versus $0.57 in the third quarter of 2013.

“These results contribute to a double digit return on equity. This was attained despite the low interest rate environment and increased regulatory expenses we are experiencing,” said Robert Schack, Chairman.

“Earnings in the third quarter reflected reduced income from our securities portfolio. Despite a 9% increase in the size of the portfolio, income generated from it was down by 10%. This was due to a decision made by the Bank as to the allocation of assets between higher yielding fixed rate securities and lower yielding variable rate securities. As it is now conformed, the securities portfolio is designed to have superior performance in a rising interest rate environment,” said Wes Schaefer, Vice Chairman and CFO.

Leon Blankstein, President and CEO, added: “We are very pleased to report that our new business efforts have resulted in excellent balance sheet growth, including a 12% increase in loan totals. This growth, as always, emanates from new clients who are well known to the Bank.”

Total assets increased 9% or $127 million to $1.476 billion at September 30, 2014 as compared to $1.349 billion at September 30, 2013. The loan portfolio (net) increased 12% or $68 million to $626 million at September 30, 2014 as compared to $558 million at September 30, 2013. Deposits increased 6% or $69 million to $1.273 billion at September 30, 2014 as compared to $1.203 billion at September of 2013. Borrowings from the Federal Home Loan Bank increased from $44 million at the end of the third quarter in 2013 to $78 million at the end of the third quarter in 2014.

During the third quarter of 2014, Net Interest Income increased $195,000 or 2% to $10,259,000 from $10,064,000 during the third quarter in 2013.

Non-Interest income during the third quarter of 2014 increased $120,000 or 14% to $953,000 from $833,000 during the third quarter of 2013.

Non-Interest expense during the third quarter of 2014 increased $608,000 or 9.8% to $6,819,000 from $6,211,000 during the third quarter in 2013. Increases in the “Other Expense” category mentioned in the Income Statement below were driven by extra cost incurred in customer related expenses, professional fees, promotion expenses and regulatory fees.

Asset quality at the end of the third quarter of 2014 remains excellent, with $42,000 of non-performing loans, or 0.01% of total loans; and, no OREO. At the end of September 2014, the allowance for loan losses stood at $12,531,000 or 1.96% of loans. During the 9 months ended September 30th of 2014, the Bank has a net recovery of previously charged-off loans totaling $631,000.

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:   September September Change   2014       2013   %

Assets:

Cash & Equivalents $ 54,338 $ 70,668 -23.1 % Fed Funds Sold 1,000 1,000 0.0 % Interest Bearing Balances 528 28 1785.7 %

Investment Securities:

US Agencies 481,336 359,695 33.8 % Mortgage Backed Securities 78,674 155,317 -49.3 % State & Municipals 178,616 161,988 10.3 % Other     3,308       3,139   5.4 % Total Investment Securities 741,934 680,139 9.1 %

Gross Loans:

Commercial Real Estate 384,317 334,810 14.8 % Commercial & Industrial 202,232 193,217 4.7 % Other Real Estate 46,872 36,713 27.7 % Other     5,288       4,745   11.4 % Total Gross Loans 638,709 569,485 12.2 % Allowance for Loan & Lease Losses     (12,531 )     (10,924 ) 14.7 % Net Loans 626,178 558,561 12.1 % Premises & Equipment 1,073 726 47.8 % Other Assets     50,790       37,689   34.8 % Total Assets   $ 1,475,841     $ 1,348,811   9.4 %  

Liabilities:

Demand Deposits $ 612,342 $ 573,039 6.9 % Money Market 585,053 549,875 6.4 % Time Deposits and Savings     75,530       80,469   -6.1 % Total Deposits 1,272,925 1,203,383 5.8 % FHLB Advances / Other Borrowings 78,400 44,000 78.2 % Other Liabilities     9,341       6,031   54.9 % Total Liabilities   $ 1,360,666     $ 1,253,414   8.6 %  

Shareholders' Equity:

Common Stock & Retained Earnings $ 116,827 $ 103,878 12.5 % Accumulated Other Comprehensive Income / (Loss)     (1,652 )     (8,481 ) -80.5 % Total Shareholders' Equity   $ 115,175     $ 95,397   20.7 % Total Liabilities & Shareholders' Equity   $ 1,475,841     $ 1,348,811   9.4 %  

Capital Adequacy:

Tangible Common Equity / Tangible Assets 7.80 % 7.07 % -- Tier 1 Leverage Ratio 8.06 % 7.79 % -- Tier 1 Capital Ratio / Risk Weighted Assets 15.51 % 15.61 % -- Total Risk-Based Ratio 16.77 % 16.87 % --  

Per Share Information:

Common Shares Outstanding 4,953,774 4,898,911 -- Book Value Per Share $ 23.25 $ 19.47 19.4 % Tangible Book Value Per Share $ 23.25 $ 19.47 19.4 %   American Business Bank Figures in $000, except per share amounts       CONSOLIDATED INCOME STATEMENT (unaudited)     For the 3-month period ended:   September September Change   2014       2013   %

Interest Income:

Loans & Leases $ 7,057 $ 6,499 8.6 % Investment Securities     3,574       3,984   -10.3 % Total Interest Income 10,631 10,483 1.4 %    

Interest Expense:

Money Market, NOW Accounts & Savings 283 311 -9.0 % Time Deposits 68 85 -20.0 % Repurchase Agreements / Other Borrowings     21       23   -8.7 % Total Interest Expense 372 419 -11.2 %     Net Interest Income 10,259 10,064 1.9 % Provision for Loan Losses     (198 )     (300 ) -34.0 % Net Interest Income After Provision for Loan Losses 10,061 9,764 3.0 %    

Non-Interest Income:

Deposit Fees 356 312 14.1 % Realized Securities Gains 372 451 -17.5 % Other     225       70   221.4 % Total Non-Interest Income 953 833 14.4 %    

Non-Interest Expense:

Compensation & Benefits 3,993 3,860 3.4 % Occupancy & Equipment 530 491 7.9 % Other     2,296       1,860   23.4 % Total Non-Interest Expense 6,819 6,211 9.8 %     Pre-Tax Income 4,195 4,386 -4.4 % Provision for Income Tax     (1,281 )     (1,295 ) -1.1 %     Net Income   $ 2,914     $ 3,091   -5.7 %   Less: After-Tax Realized Securities Gains $ 258 $ 318   Core Net Income   $ 2,656     $ 2,773   -4.2 %  

Per Share Information:

Average Shares Outstanding (for the quarter) 4,953,774 4,895,700 -- Earnings Per Share - Basic $ 0.59 $ 0.63 -6.8 %  

Earnings Per Share "CORE" - Basic

$ 0.54 $ 0.57 -5.4 %   American Business Bank Figures in $000, except per share amounts           September September Change   2014       2013   %  

Performance Ratios

Return on Average Assets (ROAA) 0.82 % 1.09 % -- Return on Average Equity (ROAE) 10.83 % 13.93 % --  

Return on Average Assets "CORE" (ROAA)

0.78 % 0.67 % --

Return on Average Equity "CORE" (ROAE)

10.32 % 8.59 % --    

Asset Quality Overview

Non-Performing Loans $ - $ - NA Loans 90+Days Past Due     42       979     -95.7 % Total Non-Performing Loans $ 42 $ 979 -95.7 %   Restructured Loans (TDR's) $ 2,512 $ 1,911 31.4 %   Other Real Estate Owned 0 0 --   ALLL / Gross Loans 1.96 % 1.92 % -- ALLL / Non-Performing Loans * 29835.71 % 1115.83 % -- Non-Performing Loans / Total Loans * 0.01 % 0.17 % -- Non-Performing Assets / Total Assets * 0.00 % 0.07 % -- Net Charge-Offs $ (631 ) $ 1,063 -- Net Charge-Offs / Average Gross Loans -0.10 % 0.20 % --  

* Excludes Restructured Loans

AMERICAN BUSINESS BANKWes E. SchaeferVice Chairman and Chief Financial Officer213-430-4000